peerTransfer is a prime example of a startup from everywhere else. The Boston company solves a problem most of us didn’t realize was a problem: it’s difficult and expensive for international college students to transfer money to pay their tuition.
Earlier this week, peerTransfer announced a $6.2 million Series B-1 from current investors Spark Capital, QED Investors, Devonshire Investors, and Kibo Ventures. The most recent round brings its total fundraising to $21.2 million. Their seed round in 2010 included Spark Capital and Dave McClure’s 500 Hats.
The idea for the company came from a problem its founder experienced firsthand. In 2008 Iker Marcaide was admitted to graduate school at MIT, but when he arrived on campus he discovered his tuition payment was lost somewhere between Spain and Massachusetts. The process of transferring money from a student’s home currency to American dollars was already expensive and time-consuming. When it’s thousands of dollars for tuition payments–and it gets lost along the way–the problem obviously becomes a big one.
The peerTransfer team has partnered with universities to provide international payments. Students transfer their tuition payment to peerTransfer, who combines it with the payments of other students. They can then negotiate a better exchange rate for everyone. Then, peerTransfer sends the money to the respective colleges. An online dashboard lets students track where their payment is in the process, and the money is guaranteed to be delivered quickly and in the right amount.
Before peerTransfer, students would deal with their local bank, which didn’t always give the best exchange rate. They also added hidden fees, and if the money made it to the right university, it was often in the wrong amount.
In November, it was reported that the number of international students coming to America had grown to a record 820,000. With that many students needing to pay their tuition, peerTransfer has found a big market that has been serviced by outdated technology and systems. The challenge is signing up universities. They do already have 350 schools in the system, including Penn State, University of Massachusetts, and–the founder’s alma mater–MIT and the platform is free, but things move slowly in education.