Flywire and Avanse: A Strategic Move to Tackle India's $2 Billion Overseas Education Payment Problem?

The education sector is a key battleground for global fintech companies, and Flywire (NASDAQ: FLYW) has just made a bold play in one of the world’s fastest-growing markets. Its partnership with Avanse Financial Services, India’s second-largest education-focused NBFC, aims to simplify cross-border payments for Indian students studying abroad—a market worth an estimated $2 billion annually. The collaboration, announced April 30, 2025, could be a win-win for both firms, but what does it mean for investors?

The Problem They’re Solving
India sends over 200,000 students abroad each year for higher education, with costs often exceeding $25,000 annually. Yet, the payment process is riddled with friction: cumbersome paperwork, opaque foreign exchange rates, and tax compliance hurdles. For example, India’s Tax Collected at Source (TCS) requires lenders to withhold 0.1% of loan amounts, a manual process prone to errors. Meanwhile, Indian students and universities face delays and fees when converting rupees to foreign currencies.

This is where Flywire and Avanse come in. By integrating Flywire’s global payments infrastructure with Avanse’s local lending expertise, the partnership tackles these pain points head-on.

Key Features: A Playbook for Efficiency
The partnership’s six pillars—transparent tracking, automated TCS compliance, competitive forex rates, simplified docs, efficient refunds, and regulatory compliance—are designed to reduce costs and risks for all parties. For students, real-time transaction tracking (via Flywire’s platform) adds transparency, while Avanse benefits from streamlined operations. Universities, too, gain faster refund processing, a critical advantage in an era of budget constraints.

Why This Matters for Flywire
Flywire’s stock has long been tied to its ability to grow payment volume through strategic partnerships. Since 2020, Flywire’s revenue has surged from $280 million to $950 million, driven by its vertical-specific focus in education, healthcare, and travel. This deal expands that moat in a high-growth market: India’s overseas education loan market is projected to hit $2.3 billion by 2027, up from $1.5 billion in 2023.

The partnership also leverages Flywire’s existing infrastructure, minimizing upfront costs. Unlike entering a market through acquisition or organic growth, this alliance allows Flywire to tap into Avanse’s 1 million+ education loan customers without taking on credit risk—a critical factor for a company that derives 85% of revenue from payment enablement fees, not loans.

Avanse’s Role: A Local Play with Global Reach
Avanse, which provides loans for international, domestic, and K-12 education, has long struggled with cross-border payment inefficiencies. By partnering with Flywire, it gains a tech partner that handles 140 currencies and serves 4,500+ clients worldwide. This integration positions Avanse to capture a larger share of India’s education finance market, where it trails only ICICI Bank.

Moreover, the deal aligns with India’s push to digitize financial services. The Reserve Bank of India’s 2023 guidelines for NBFCs emphasized the need for better cross-border payment systems—a gap this partnership directly addresses.

The Risks and Uncertainties
While the partnership is operationally ready, execution is key. Flywire’s stock has historically reacted poorly to revenue misses (e.g., a 20% drop in 2022 after Q4 volume fell short). Investors will watch closely to see if the Avanse deal translates into meaningful revenue growth.

Additionally, regulatory risks loom. India’s foreign exchange policies are subject to sudden changes, and Flywire’s reliance on competitive forex rates could backfire if currency volatility spikes.

Conclusion: A Strategic Move with Upside Potential
This partnership checks multiple boxes for Flywire: it leverages its existing tech, taps into a high-growth market, and avoids credit risk—all while addressing a clear pain point for Indian students. For Avanse, it’s a chance to modernize its offering in a competitive space.

The numbers support the optimism. If Flywire captures just 10% of India’s $2.3 billion overseas education loan market by 2027, that’s $230 million in potential revenue—significant for a company with $950 million in annual revenue today. Meanwhile, Flywire’s stock, trading at 12x forward revenue (vs. 15x for PayPal), offers room to grow if the partnership delivers.

Investors should also note Flywire’s broader strategy: it’s doubling down on vertical-specific fintech, not just payments. The Avanse deal isn’t just about money—it’s about reinforcing Flywire’s position as the go-to partner for institutions and lenders navigating complex global transactions.

In a sector where execution often trumps ambition, this partnership feels like a calculated step forward. For now, the ball is in Flywire’s court to prove it can convert scale into profit.