Paying for college is a drag for anyone. Turns out it’s even more of a hassle for international students: To pay for college, they have to use expensive wire transfers from Western Union or Moneygram.
Boston-based peerTransfer is making it easier for international students, and it just raised $22 million to expand its money-related student services.
PeerTransfer works with colleges as a sort of collections agency or billing partner. Students and parents pay through peerTransfer’s portal with the payment method of their choice (the company will accept over 200 currencies and anything from Visa and Mastercard to Alipay). The company then facilitates its own money exchange. So rather than relying on the bank to exchange yen for dollars, peerTransfer will deposit the yen into a bank account in Japan and then withdraw money from one of its U.S. accounts to pay the college.
For example, let’s say I am a Londoner attending MIT. I can pay my tuition bill in pounds to peerTransfer and in turn peerTransfer will send dollars to MIT. I incur a fee in exchange (1-1.5 percent of the money transferred), while the college pays nothing. What’s more, money changes hands within 36-48 hours. Through traditional bank transfers or money wiring services, it can take a week. But because peerTransfer isn’t taking the usual banking channels to exchange money, it can do it a lot quicker.
The company also offers a 24/7 hotline for students and their parents, so even when the school’s billing department is closed, students and parents can get answers.
There are some companies trying to disrupt international money transfers already. Perhaps the closest cousin to peerTransfer is World Remit. The company facilitates international money transfers for a low fee to anyone, but the service isn’t tied to a bill paying service the way peerTransfer is.
So far, 600 schools in the U.S., Canada, the U.K., and Australia use peerTransfer — not quite double the number it cited in 2013.
The company says the new round of funding will allow it to offer other student financial services, like a way to help parents furnish students with money for living expenses without opening up a U.S. bank account.
The company is also considering expanding into other industries outside of education.
“When you’re paying a $100,000 bill there’s no good way to do that unless you’re on the banking rails,” said chief executive Mike Massaro over the phone. His best example was for foreign property buying. For instance, say you live in Russia and you’ve amassed enough rubles to buy a San Francisco pied-á-terre. PeerTransfer’s network could easily make that transaction happen and likely for less than you’d pay to have the money wired.
But for the moment, there are no hard plans for how peerTransfer will move forward.
Bain Capital Ventures led the round. Spark Capital, Devonshire Investors, Accel Partners, and QED Investors contributed to the round. Since its founding in 2009, peerTransfer has raised a total of $43.2 million.