As the payments landscape continues to shift – driven by an increasingly global economy, the adoption of more digital-only channels, and increased concerns over security and transparency – Mike Massaro, CEO of Flywire (formerly Peer Transfer) weighed in on the future of global payments. One area in which he anticipates significant growth, as well as continued change, is larger, cross-border payments. Massaro calls out five areas to watch in 2016 and the years to come.
The emergence of a new “global citizen” demographic
Today, there are more people transacting across borders in larger sums than ever before. This group does not feel bound by borders in terms of lifestyle, access or travel. They are spending increasing amounts on goods and services outside their home countries, resulting in a dramatic growth in cross-border payments – for education for their children, for medical care, for real estate and for other offerings. Businesses looking to appeal to this growing and affluent segment must take steps to reduce the friction in today’s cross-border payment process.
An Increasing preference for digital channels for large cross-border payments
As large, cross-border payments become more common, consumers are looking for the most convenient, cost-efficient and transparent options. This is driving more of these transactions to the Web and mobile channels vs. traditional agent-based and bank-based options. The Web and mobile channels offer the ability to track payments instantly, confirm receipt and better understand the fees involved. The traditional agent-based model, while still sizable, will continue to diminish in importance as Millennials and Gen Xers gain affluence. Banks are already being forced to consider new forms of service delivery, as legacy models and fee structures diminish in relevance for younger segments who do not consider themselves bound by the banks their parents patronize.
A stronger focus on compliance and transparency with the threat of terrorism
With ever-increasing terror threats and the focus on cutting off financing sources for nefarious acts, we can expect to see a much greater emphasis on transparency and compliance. Any entity processing large, cross-border payments will need to be able to verify sources and recipients with increasing precision and certainty; ensure strict compliance with anti-money-laundering laws; and be able to provide detailed transaction reporting.
Increased demand for support services related to cross-border payments
Entities accepting large, cross-border payments in any significant volume will also need to be able to provide ancillary support services related to those payments. With consumers from around the world making large payments in different time zones, 24x7, multi-lingual, omnichannel customer support – including phone, email, chat, text and social media – becomes essential.
Significant growth in large cross-border payments in two specific markets
Education: In 2014, 4.5 million students from around the world attended schools internationally according to Open Doors. That number is expected to grow to 8 million by 2025. In the US alone, almost 1 million international students from 220 countries spend an estimated $27B in tuition and living expenses. It’s a big business – and it's getting bigger every year.
International Patient Care: Patients Beyond Borders estimates that the worldwide market for International Patient Care (sometimes referred to as “Medical Tourism”) is at $40 billion today, and growing at a rate of 15-25%. Patients are traveling abroad from all over the world for access to more affordable procedures, shorter wait times and the latest advancements in medical care.
“Cross-border commerce and money movement is complex but as the world becomes more global, it’s essential that we remove the barriers that exist in traditional channels,” said Massaro. “As we do, the volume of cross-border money movement will grow and open up tremendous opportunities for businesses, institutions and consumers around the world.“
Flywire, formerly peerTransfer, is a leading provider of high-ticket cross-border payment solutions, connecting institutions on six continents with consumers from around the world. Introduced four years ago as a way for international students to pay their tuition for studies abroad, Flywire is now welcomed by almost 900 colleges and universities. The company processes payments on behalf of students from 220 countries and territories, in 70 local currencies. Convenient, fast and secure, Flywire’s scalable cross-border platform accepts bank transfers, online banking, and credit and debit cards – providing currency conversion at exchange rates that can offer significant savings when compared to home-market banks and credit card providers. Committed to a great end-to-end customer experience, the company offers multilingual servicing via phone, email, and chat as well as 24/7 online payment tracking.