The world continues its march towards “cash”-less payment connectivity.

Credit cards were the early forerunners of a paperless payment system. Since then, payment systems have gone digital.

Today, we can pay for a transaction with a tap of a card or a phone, get a receipt emailed instantly, and a merchant can process transactions without opening a cash drawer.

While digital payment can sometimes seem ubiquitous, its growth is far from over, as technological advancements extend it to more rural and smaller merchants globally.

In 2025, the total transaction value of digital payments is expected to be approximately $20 trillion.

By 2029, this value is expected to nearly double to $37 trillion, a 16% annual growth rate.

Moreover, with the pandemic fundamentally altering consumer shopping patterns, the world is likely to see more payments shift online, and more vendors may look to sell globally to access underpenetrated, fast-growing digital markets.

Mobile commerce made up roughly 57% of all e-commerce sales going into the pandemic. In 2024, it eclipsed a 60% share, and all trends indicate more and more transactions will move to mobile phones.

Meanwhile, with social media fueling more global connectivity, B2C cross-border transactions are expected to rise from approximately $785 billion in 2021 to $7.9 trillion in 2031, a 10x return in a decade.

Companies that are set up to fuel this scaling and increasingly complex ecosystem could skyrocket going forward.

Flywire (FLWY) is a digital payments platform that focuses on high-value transactions and serves the education, healthcare, and travel sectors.

The company built its reputation on offering seamless cross-border payment solutions that address the unique needs of organizations dealing with international transactions.

By combining payments with industry-specific software tools, the company has set itself apart from broader fintech providers.

From its early days, Flywire concentrated on making international tuition payments simpler for students and educational institutions.

Over time, the company broadened its scope to include essential software components like collection management, automated billing, and accounts receivable handling that are tailored to the needs of its clients.

This integration not only streamlines payment processes but also helps institutions manage their finances more effectively across borders.

Despite facing challenges in some markets, notably the education segment in Canada where stricter immigration rules have impacted student flows, Flywire has managed to sustain organic growth.

In the travel sector, the company is making significant strides by extending its services to a broader range of transactions.

Travel-related payments whether for booking services or managing currency exchanges, demand a high level of security and efficiency.

Flywire’s platform meets these needs by offering a system that is both simple to use and deeply integrated with the operational needs of travel agencies and other service providers.

The healthcare market presents another important area for Flywire. Handling payments in healthcare involves managing complex, high-value transactions where precision and trust are essential.

Hospitals and medical providers, along with international insurers, need a system that can reliably process payments without delays or errors.

Flywire’s niche focus on education, healthcare, and travel payments differentiates it from broader fintech players and has enabled the company to achieve a 43% Uniform return on assets ”ROA” with 34% asset growth.

Despite strong profitability and impressive growth, Flywire trades well below market averages at a 19.7x Uniform P/E.

Markets appear to be concerned about competition in cross-border payments and regulatory complexity while staying relatively optimistic.

We can see what the market thinks through our Embedded Expectations Analysis (“EEA”) framework.

The EEA starts by looking at a company’s current stock price. From there, we can calculate what the market expects from the company’s future cash flows. We then compare that with our own cash-flow projections.

In short, it tells us how well a company has to perform in the future to be worth what the market is paying for it today.

At the current stock price, the market expects the company’s ROA to stay at 44% instead of improving as Wall Street analysts predict.

A key factor behind Flywire’s success is its deep integration into the industries it serves. 

The company has developed long-lasting relationships with its customers by delivering consistent, reliable service that meets the specific needs of education, healthcare, and travel.

Its business model, centered on recurring transaction flows, creates a stable environment where institutions can rely on the company not just for payment processing but also for managing related financial tasks.

This integrated approach adds a layer of security and stickiness that is hard to replicate in a market crowded with more generic solutions.

Moreover, Flywire has shown a commitment to growing its platform through strategic acquisitions.

The company not only strengthens its existing market position but also opens doors to new customer segments.

As the need for streamlined international transactions continues to grow, Flywire’s integrated approach and deep industry knowledge position it well to capture this expanding market.

Best regards,

Joel Litman & Rob Spivey
Chief Investment Officer &
Director of Research
at Valens Research

Today’s analysis highlights the same insights we share with our FA Alpha Members. If you want to an get in-depth analysis of market trends and uncover undervalued stocks, become an FA Alpha Member today.