With peerTransfer, a way to pay tuition abroad
Beta Boston | A Boston Globe Site – By Jessica Meyers
Startup aims to make life easier for foreign students in US
A Boston startup born out of an international student’s frustration with overseas payments is pegging its future success on China, the largest source of foreign learners in the United States.
The company, a global payments system operator called peerTransfer, announced its expansion into Shanghai on Thursday, buoyed by the flood of Chinese students from abroad and the country’s careful embrace of economic reforms.
The move, propelled this year by $22 million in new funding, largely from Bain Capital Ventures, reflects both the company’s rapid growth and the sweeping potential of the world’s second-largest economy.
More than a 250,000 Chinese study in the United States, composing nearly 30 percent of all foreign students, according to the Institute of International Education. The percentage of Chinese students in Massachusetts exceeds that of foreign students from the next four largest countries combined.
The number of foreign college students in the United States reached a record high in the 2013-2014 school year, exceeding 886,000. The Commerce Department estimates their spending in 2013 contributed more than $27 billion to the US economy.
“It’s shocking how many people cross borders for education,” said Mike Massaro, the chief executive.
Founded in 2009, the company aims to simplify the confusing and often cumbersome process of making tuition payments to US universities. It works with more than 700 schools worldwide, including about 50 in Massachusetts, so students — or their parents — can transfer money through their desired method in their local currency. Both sides can track the process.
Iker Marcaide decided to start the firm when he was a MIT graduate student after his wire transfer disappeared somewhere between Spain and Boston.
Massaro likens peerTransfer to creating local bank accounts all over the world. It costs students less, he said, because the company pulls payments together and negotiates a cheaper currency exchange rate with banks.
That is also how peerTransfer makes money. PitchBook, a Seattle firm that researches startups, says the company’s value is $110.8 million.
While peerTransfer has offices in Spain and England, the expansion marks its first presence in Asia. It comes with different rules and risks.
Foreign financial services companies face a litany of restrictions on the movement of funds. China also limits the amount of money citizens can transfer out of the country annually, though it has loosened the caps for education purposes recently.
Massaro sees more advantages. He wants the Shanghai office to be a regional hub that encourages banking relationships and creates a sales presence for other countries in the region.
“There are huge corridor chains from China to New Zealand and Australia, Vietnam to China,” he said. “Those are all opportunities for us.”
Foreign students, particularly from China’s burgeoning middle class, also present an opportunity for American colleges facing a sluggish economy and dwindling federal aid.
James Garrant, who spent more than a decade handling student accounts for Wellesley College, remembers receiving money transfers with no specific name. Some had information scribbled in foreign languages. He spent hours calling banks to track funds from halfway around the world.
“It was a web, how money got from one place to another,” said Garrant, now the director of student accounts at Lasell College in Newton and a devotee of peerTransfer.
“International students [travel] quite a long way,” he said. “You can imagine the type of stress, showing up without their funds.”
Jessica Meyers is a reporter in the Boston Globe’s Washington bureau. She can be reached at [email protected]
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