âA lot of companies are seeing the value in owning just a piece of this market,â Massaro tells FinTech Futures. âThere is a pro venture perspective. People see a $24 trillion cross border industry and decide that if they can get a tiny slice of that they will be a big company.â
The reality, says Massaro, is that the $24 trillion isnât moving around for the same reason. âItâs very different industries. Itâs very different use cases. It all relates to different systems and processes. Itâs hard to get to significant scale being everything to everyone, and nobodyâs really done it yet.â
Flywire was founded in 2009 to simplify the process of paying for education while living abroad. The firm has since raised $143 million in funding and processed more than $12 billion in payments volume.
The firm recently appointed former Apple Pay executive Rob Orgel, placing him in a newly-created president and chief operating officer role.
Massaro says Flywire purposely seeks out industry verticals that have problems, because it knows that their back-end systems would be different to the norm. âTravel booking systems, for instance. If you canât integrate to the bookings platforms, youâre not that valuable to them.
âIn education, if youâre not connected to the student information systems and donât have experience integrating software with those student information systems, you canât deliver a full solution.
âThese industries donât have people sitting there with a tonne of engineers saying, âjust give me an APIâ.
âSome clients donât want an API. Some clients want to hand the problem off to somebody and say, âfix that for me.â
âThe University of Liverpool or Harvard doesnât have a bunch of engineers saying, âgreat, I just want the best API and Iâm going to build this really awesome billing and payment solution.â They want someone who can come in with a solution and industry-level expertise.â
You donât have to be a payments geek to get value from the tech
Massaro believes that people shouldnât have to be a âpayments geekâ to operate a business that takes significant deposits or transactions.
When asked why many firms in the market have been trending towards a platform strategy, Massaro suggests that creating a bigger pool of addressable markets gets investors more excited.
âThere are infrastructure platform players that aim not to be vertical specific and move lots of money, and the card schemes have made it very obvious that they are interested in an alternative card rail.â
The creation of that alternative rail could have been behind some of the industries big mergers since the start of 2019. Weâve seen FISâs $43 billion acquisition of Worldpay, Fiservâs $22 billion buyout of First Data, and Visaâs snapping up of Earthport ($143 million) and mega-deal for Plaid ($5.3 billion).
âConsolidation is healthy,â says Massaro. âThere are a lot of companies out there with a lot of free cash flow. These massive companies are willing to make very long-term bets. In many ways it can be harder to innovate internally than just acquiring someone.
âWhat I find kind of ironic is that card processing used to be owned by the bank. In some ways they gave up processing, said it wasnât core. Now they see the Adyens and the Stripes and the Worldpays and have started to think âwhoa, maybe we should be in paymentsâ. Thatâs a natural divestiture-consolidation lifecycle.
âYet there is some potential here. If Visa can connect Earthport with authorisation and integration into the banks, then weâre looking at an equivalent rail to a card processing system that is truly global. That isnât something that will happen quickly, though. That could be a five or ten-year plan.â