From rupees to euros, students get more bucks
A Cambridge start-up is easing the financial pain of foreign students who transfer thousands of dollars in tuition payments to study at U.S. colleges.
International students lose an estimated $1 billion per year in fees and bad currency-exchange rates when paying through overseas banks, according to PeerTransfer.
Founder and CEO Iker Marcaide, originally from Spain, paid the price himself when he was working in London for Boston Consulting Group in 2008 before beginning his MBA studies at the Massachusetts Institute of Technology as one of the 800,000 foreign students in the United States.
“The money actually got lost,” Marcaide said. “The money didn’t show up, and I had to do a lot of follow-up e-mails with the school.”
But though he started PeerTransfer after his troubles as a student, Marcaide said schools also have difficulties reconciling payments and posting them to the right student accounts.
PeerTransfer has partnered with nearly 30 schools, including Wellesley College and Suffolk University, to streamline their processing of international payments. The service is free to them — the company takes a small margin of the savings that it passes on to students using its site.
While banks include a 3 percent to 6 percent margin on foreign exchanges, PeerTransfer adds 1 percent. Students can save about $700 on a $25,000 tuition payment, according to PeerTransfer, which processes several million dollars per week.
“We collect the (students’) money in the home currency — euros, for example — and we bundle them together with the euros from many other students and exchange them into U.S. dollars. Because of the volume, we can get a really good rate,” Marcaide said.
PeerTransfer has raised $7.5 million in venture funding, led by Boston’s Spark Capital.
“PeerTransfer has rapidly emerged as the leading company in the international payment processing industry, gaining impressive traction with clients in the higher education space,” said Alex Finkelstein, a Spark general partner. “(It) has beaten all of its milestones since we invested in the company less than a year ago.”
PeerTransfer plans to double its team of 25 employees in the next few months. Now ensconced at Dogpatch Labs, it’s also looking at new office space.
“We’re pretty much the leader in international education payments in the United States, and our vision is to be the global leader,” Marcaide said.
By Donna Goodison, The Boston Herald