peerTransfer Raises $6.4M to Help International Students Pay Tuition
VentureWire (Dow Jones & Company) – By Lora Kolodny
peerTransfer Inc. said it has raised $6.4 million in a new Series B round of venture funding to help international students pay tuition without having to pay traditionally high fees for their transactions to banks.
Investors in the Boston startup included QED Investors, led by Nigel Morris, a co-founder of Capital One Financial Services, and Madrid-based firms Fides Capital and Kibo Ventures . Earlier investors also participated in the round, including Spark Capital and Maveron.
When Spaniard Iker Marcaide, founder and chief executive of peerTransfer, attended Massachusetts Institute of Technology he said his family spent more than $1,000 a year on bank fees to transfer about $40,000 in tuition to the school.
The process frustrated him further, he said, because he never knew where the money was, or if all the payments were received on time by MIT, so that he could enroll without a problem each year.
Today his startup peerTransfer works with 350 schools—mostly colleges and universities, with some K-12 boarding schools—in the U.S., Australia, Canada and the U.K., to transfer tuition payments from international students at “better than bank rates.”
peerTransfer also offers students and their families around-the-clock access to data about the status of their tuition payments. Students from more than 190 countries have paid their tuition via peerTransfer so far, said Mr. Marcaide. On average, he said, they save $500 a year using peerTransfer rather than debit cards, credit cards or any more-traditional means of payment.
The company recently rolled out a new product to help schools make outbound payments for those participating in study-abroad programs.
Spark Capital General Partner Alex Finkelstein said his firm actively looks for financial-services startups that “disrupt large banks that have been taking large fees from consumers just because they can.” He said banks charge 3%-6% per international money transfer, typically, and peerTransfer can get that down to 1% in many cases.
The investor wants to see peerTransfer “take 75% or more” of the U.S. market within 12 months, given its new capital. According to peerTransfer’s CEO, international students in the U.S. spend $20 billion a year domestically, including $13 billion on tuition alone.
peerTransfer plans to use its funding to hire account managers who work closely with schools; to begin handling payments in additional currencies; and to create new technology and products to help students reduce the cost of bank fees as they invest in their own education.← Back to Articles