Flywire’s Deal to Buy Canada’s ScholarFX Adds to Its Growing Niche in Tuition Payments

It’s often neglected in the payments business, but one of the fastest-growing markets is processing cross-border transactions for college and post-graduate students studying abroad. The business is dominated by wire transfers, but a startup called Flywire, which has served the market for more than four years, is enjoying fast growth.

On Wednesday, the Boston-based company, which serves educational institutions in 11 countries, said it has acquired ScholarFX, a competitor based in Toronto, for undisclosed terms. By adding ScholarFX, which processes international tuition and room-and-board payments for Canadian institutions, Flywire can now claim to serve nearly 900 schools worldwide, up from 720 since last summer.

The company projects it will process $2 billion in volume by the end of the current academic year, twice the sum it processed in the previous school year. Flywire did not announce how many students ScholarFX is processing payments for, but the deal should add significantly to its market share. In September, Flywire said it was serving 603,000 students, or about 13% of the 4.5 million students studying abroad.

The ScholarFX deal is also important to Flywire, which until September was known as peerTransfer, because of Canada’s fast growth among countries attracting foreign students. Some 330,000 international students matriculated at Canadian schools in the 2014-15 academic year, an 83% increase since 2008, according to statistics quoted by Flywire.

“The acquisition of ScholarFX expands our ability to attract and service Canadian educational institutions while adding to the scale of our industry-leading cross-border payment platform,” said Mike Massaro, Flywire’s chief executive, in a statement. “ScholarFX has a great understanding of the Canadian market and their personalized, customer-centric approach to service is perfectly aligned with ours. We’re also excited to bring all the advantages of our solution to this fast-growing market.”

As part of the deal, ScholarFX will be rebranded as Flywire Canada, with headquarters remaining in Toronto, and its client schools will move to Flywire’s platform over the coming months. The company’s founder, Darren Chadwick, will join the Canadian unit in what Flywire calls a “leadership role.”

Flywire has been acquisitive in recent months. In October, it bought Uni-Pay, a U.K. rival, in a deal for which terms were not disclosed. That acquisition nearly doubled Flywire’s U.K. portfolio to more than 120 schools. The company has also expanded into related markets. In October, it entered the $40 billion medical-tourism market, in which patients travel abroad to seek care.

Flywire lets students pay into a local account in their home currency. It pays the foreign institution in full in the institution’s home currency and quotes a foreign-exchange rate to the student that allows it to earn a spread over negotiated rates. The spread averages 1.6% across all of the 70 local currencies Flywire supports. The company, which accepts bank transfers and credit cards, doesn’t levy a transaction fee, though the student’s local bank might.

That contrasts with wire transfers, which involve fees to both the sender and the receiver, as well as foreign-exchange cost.

Since its founding in July 2009, Flywire has raised $43.2 million in five funding rounds, the most recent of which was a $22 million Series D led a year ago by Bain Capital Ventures.