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The Boston-Based Education Payments Company Quietly on Track to Process $1 Billion

BostonInno – By Lauren Landry

The international side of the payments industry is still unfair, and it’s a problem Mike Massaro joined the peerTransfer team to try and fix.

“I look at domestic payments, and everyone is kind of fighting for pennies over the dollar,” said Massaro, who transitioned from the company’s VP of business development to CEO in December 2013. “But with international payments, there are actual percentage points.”

Roughly $50 billion worth of education payments cross the border annually, according to Massaro — a sign of peerTransfer’s potential. Through peerTransfer, college students are able to cover the costs of tuition and fees using their home currency. The company currently supports currencies from more than 95 countries at over 475 institutions across the United States, Europe, Canada and Australia.

What’s more, the startup, based in Boston’s Financial District, has expanded their supported payment methods. Students and their families can pay via bank transfers and e-wallets, or, as peerTransfer continues to expand, their credit or debit card, given the company has started working with the major card providers.

Each strategic move has paid off for the payments company. peerTransfer saw 400 percent growth last year, and is expecting 200 percent growth in 2014. “We expect to process one billion dollars this academic year,” Massaro said, adding, “As we process this billion in the upcoming year, it shows just how early this space still is and how much potential there is.”

Iker Marcaide, a graduate of the MIT Sloan School of Management, launched peerTransfer in July 2009 after “his own payment to MIT from Spain disappeared over the Atlantic.” In October the following year, the company received $1.1 million in seed funding, led by Spark Capital.

“We seeded it when it was literally a one-person company,” said Alex Finkelstein, a general partner at Spark Capital, in a previous interview. “Now, they are closing about 20 schools a month, which is almost unheard of in the education world.”

Marcaide has since shifted to the startup’s chief of strategy, but, under his leadership, helped the company grow from a one-man show to a 50-person team. peerTransfer has raised $21.2 million in total. Despite the success, Massaro described the company as “still very early-stage.”

“There are still hundreds of thousands of schools out there who don’t have a solution,” Massaro noted, stating the vast majority of peerTransfer’s 500 clients are in the U.S. “Getting schools outside the U.S. is a key focus.”

What continues to motivate Massaro and his team is that they can help make international payments more fair. Students receive better currency exchange rates through peerTransfer and can have their payments delivered in two days. On the other side, schools can automate the reconciling process, and eliminate unidentified, missing or short balance international payments.

As Finkelstein said earlier, “It just [makes] sense. The banks are ripping students off. With us, students are saving $1,000 a year.”

peerTransfer has its sights set on going after Western Union and the other big banks that don’t have students’ best interest in mind. “Anytime you can be disruptive, it can be great,” Massaro added, and peerTransfer is nothing if not disruptive.

In the future, after properly tackling the education space, Massaro said he could see peerTransfer infiltrating other markets, like real estate. Five percent of all the real estate in the U.S. is bought internationally, according to the chief executive.

“Huge transactions are crossing borders, but we don’t have ways to get a fair and reasonable exchange rate,” Massaro said. “We look at it from the biller side. If you’re trying to collect a payment for a real estate property … there are no convenient ways for people to pay you.”

Until peerTransfer, that is. The company is only just starting to hit its stride.

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