When Lost Money Inspires
The sometimes awkward business of handling money transfers by overseas students is attracting interest from entrepreneurs.
The Boston-based company peerTransfer, which has already signed up to its service the Australian Catholic University, now allows payments in the Chinese currency.
International students paid $3.7 billion in fees to study in Australia, the ABS reported in 2009.
But the traditional bank transfer method of making payments was costly, unpredictable and prone to mix-ups, according to peerTransfer chief executive Iker Marcaide.
“When you’re moving internationally, you have so many things to worry about – the money is the thing that you never expect to create issues,” he said.
Mr Marcaide set up the company after his own tuition money got lost “somewhere over the Atlantic” in 2008.
A native of Spain, he was headed for an MBA program at MIT in the US.
He said the reference information used by banks for transfers could be truncated or omitted, making it difficult for the university to identify who had made the payment. For example, an uncle might make the transfer on behalf of a Chinese student.
Other problems included a poor exchange rates for the student, lack of certainty the institution would receive the right amount in the target currency, and delays in the money arriving.
Institutions using peerTransfer direct students to a customised webpage that shows how much needs to be paid in any one of 48 currencies in order to transfer a given fee amount in the target currency.
Students can track the progress of the transfer online, and the university can see when a payment had been made.
Neither university nor student pay a fee to use the service and Mr Marcaide said a Chinese student coming to Australia would end up saving 1-2 per cent of the payment amount after conversion, compared with the traditional bank transfer route.
Mr Marcaide said his company made its money by securing a wholesale rate for currency, retaining some of the savings, and having low overheads.
So far, peerTransfer has signed up ACU, the University of Southern Queensland, and the University of the Sunshine Coast.
By: Bernard Lane