{"id":3799,"date":"2021-11-19T12:07:32","date_gmt":"2021-11-19T12:07:32","guid":{"rendered":"https:\/\/www.extravelmoney.com\/blog\/?p=3799"},"modified":"2024-01-01T10:54:45","modified_gmt":"2024-01-01T10:54:45","slug":"flywire-university-fee-payment-cheap-or-costly","status":"publish","type":"post","link":"https:\/\/www.extravelmoney.com\/blog\/flywire-university-fee-payment-cheap-or-costly\/","title":{"rendered":"Flywire University Fee Payment, Cheap or Costly?"},"content":{"rendered":"\n
\"\"<\/a><\/figure>\n\n\n\n

Let\u2019s play a game. <\/span><\/p>\n\n\n\n

Answer the following questions with a Yes or No.<\/span><\/p>\n\n\n\n

Are you going to study in a university in the US, Canada, UK, Australia or any other country abroad?<\/span><\/p>\n\n\n\n

Is the university asking you to make the tuition fee payment via Flywire?<\/span><\/p>\n\n\n\n

Did you check the difference between the Flywire exchange rate and the live exchange rate on Google? Do you feel their rate is exorbitant?<\/span><\/p>\n\n\n\n

Welcome to the murky world of money transfer.<\/span><\/p>\n\n\n\n

In this post, you\u2019ll find out why money transfer through Flywire is such a costly affair.
<\/span>Learn why some universities abroad insist you pay their tuition fee via Flywire and not through a direct money transfer to their bank account.<\/span><\/p>\n\n\n\n

Also, find out if there is a cheaper, legal alternative to Flywire. You may be able to save thousands of rupees on your university fee payment abroad with a lesser exchange rate and cheaper service fee. <\/span><\/p>\n\n\n\n

Flywire Money Transfer – Cheap or Costly Exchange Rates & Charges<\/b><\/h2>\n\n\n\n

Flywire is a billing and international payments enabling service. It allows institutions (such as universities, hospitals) to bill and request payment from their customers from different countries<\/span><\/p>\n\n\n\n

Universities that are partnered with Flywire, use the service to receive money for tuition and lodging from International students. <\/span><\/p>\n\n\n\n

Every enterprise has a cost of doing business, even Flywire. <\/span><\/p>\n\n\n\n

How they recover this cost is by fixing a premium margin on the exchange rate on their money transfer transaction. <\/span><\/p>\n\n\n\n

\"Flywire<\/a><\/figure>\n\n\n\n

Though they advertise wholesale exchange rates cheaper than banks, usually it is just as costly, if not costlier. <\/span><\/p>\n\n\n\n

Let\u2019s do a comparison between 20,000 CAD rate on Google vs Flywire (as on 10 Nov 2021)<\/span><\/p>\n\n\n\n

20,000 CAD – Google Live Exchange Rate<\/b><\/span><\/a><\/p>\n\n\n\n

\"20000<\/a><\/figure>\n\n\n\n

20,000 CAD – Flywire Exchange Rate<\/b><\/span><\/p>\n\n\n\n

\"20000<\/a><\/figure>\n\n\n\n

That is a difference of Rs 17,708! <\/b><\/p>\n\n\n\n

A charge of nearly 1.5% on the total amount being transferred is costly for education purpose.<\/span><\/p>\n\n\n\n

The reason Flywire is expensive is that;<\/b> <\/span><\/p>\n\n\n\n

    \n
  1.  Trust Factor<\/b> – Usually, when it comes to payments abroad, students\/parents would look for the safety of the transaction as the 1st priority since the amount involved is quite big.<\/span>
    <\/span>
    <\/span>This allows certain banks and companies like Flywire to charge a premium exchange rate on their transfers as they have the approval of the university abroad to collect the payment from the students.<\/span><\/span><\/span><\/span>These institutions know that students\/parents would prefer them even in the face of bearing costlier rates. This is because of the trust factor involved. However, cheaper and equally safer alternatives do exist (authorized by RBI to do money transfers abroad from India). We\u2019ll discuss this in a while.<\/li>\n\n\n\n
  2. Monopoly Factor<\/b> – Flywire has entered into agreements with many top universities abroad acting as their de-facto payment collection agency.This exclusivity gives them an almost monopoly-like market where students\/parents transfer money through them. So they are able to put a higher margin on their rates.<\/li>\n\n\n\n
  3. Rate Hedging<\/b> – A payment invoice for money transfer generated by Flywire is typically valid for 3 days. Usually, the exchange rate of currencies keeps changing every minute.Yet Flywire is able to guarantee the same rate for up to 3 days. This is because, to hedge against the fluctuations in the exchange rate during this period, they set high margins on their currency conversion.Since the margins are high, Flywire can be sure that any currency fluctuation is not going to affect their revenues.<\/li>\n<\/ol>\n\n\n\n
    For Ex:<\/strong> Imagine that <\/strong><\/span>USD Live Rate (Google) is Rs 75<\/strong>\n

     And Flywire Rate for a money transfer transaction on the same day is Rs 76<\/span>
    <\/span>
    <\/span>Day 1 USD Live Rate – Rs 75
    <\/span>Day 2 USD Live Rate – Rs 75.2<\/span>
    <\/span>Day 3 USD Live Rate – Rs 75.4<\/span><\/p>\n

    Even if the transaction takes place on Day 3, Flywire will be making a good profit on it. <\/span><\/p>\n

    Alternatively; Imagine another scenario<\/strong>. The rates drop down. At this point, the amount of currency exchange fees you\u2019d be paying would become very high.<\/span><\/p>\n

    USD Live Rate (Google) – Rs 75<\/span><\/p>\n

    Flywire Rate for a money transfer transaction – Rs 76<\/span><\/p>\n

    Day 1 USD Live Rate – Rs 75
    <\/span>Day 2 USD Live Rate – Rs 74.9<\/span>
    <\/span>Day 3 USD Live Rate – Rs 74.7<\/span><\/p>\n

    Now if you were to do the transaction on Day 3, you\u2019d be paying a difference of Rs 1.3\/US dollar. This is a very high margin.<\/span><\/p>\n

    So no matter which direction the rate fluctuates, Flywire can be sure of a high-profit margin on the money transfer.<\/span><\/p>\n<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

    These are the reasons why a money transfer through Flywire is costly.<\/span><\/p>\n\n\n\n

    Why is your university asking you to do the payment via Flywire?<\/b><\/h2>\n\n\n\n

    Flywire was started in 2009, in Boston, USA. It was called peerTransfer back then. <\/span><\/p>\n\n\n\n

    It offered colleges in the US a way to collect funds from students abroad.<\/span><\/p>\n\n\n\n

    International money transfer is fraught with many technical difficulties. <\/span><\/p>\n\n\n\n

    Each country\u2019s regulatory authority has its own rules and regulations which the university faculty may be unaware of. <\/span><\/p>\n\n\n\n

    By delegating the task of receiving payments, universities avoid all complications related to payment collection from students. <\/span><\/p>\n\n\n\n