Flywire (FLYW) Bets On Open Banking To Widen Its Payment Moat
On August 12, Flywire (NASDAQ:FLYW) announced an expansion of its partnership with Trustly, introducing Pay by Bank open banking payments to customers in the US and Canada. This feature allows users to authorize ACH and Pre-Authorized Debit transfers directly from their bank login, eliminating the need for routing and account numbers that often cause difficulties in cross-border transactions.
The collaboration between Flywire and Trustly began in 2017 in Europe and now extends to North America. Trustly conducts a real-time balance check when a payer authorizes a transaction, preventing the submission of payments that will result in insufficient funds. Flywire manages the funds through the return window, minimizing reversals that have historically complicated international payments.
Kate Moran, Flywire's Vice President of Global Payments, stated that they are leveraging the open banking infrastructure they have successfully scaled in Europe to North America, providing clients with a reliable experience. The timing of this announcement coincides with a period of accelerated growth for Flywire. In the second quarter of 2026, the company reported a 27.2% year-over-year increase in revenue to $167.7 million and a 38.2% rise in total payment volume to $8.2 billion.
Management raised its full-year guidance for revenue growth and adjusted EBITDA margin, indicating confidence in the company's expansion. However, Flywire also experienced a decline in gross margin from 57.0% to 53.4% and an even more significant drop in adjusted gross margin from 61.1% to 56.6%. Despite the growth, the company still posted a GAAP net loss of $8.1 million for the quarter, reflecting the challenges of scaling a business focused on payment services.
Flywire's leadership expressed caution regarding the education vertical due to the current visa policy environment, acknowledging that the company's largest historical vertical faces external headwinds. Institutional investors, including hedge funds, have shown increasing confidence in Flywire, with ownership rising from 28 funds to 35 in the most recent quarter.
The stock's forward P/E ratio stands at 20.45, reflecting a middle-of-the-road valuation for a company with robust revenue growth.
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