Global payments firm peerTransfer announces today (January 13) that it closed a major funding round and hit a key profitability milestone. peerTransfer is an efficient, cost effective and transparent alternative to the existing friction-laden international funds transfer services, including bank wire. peerTransfer’s global payments platform provides students from 200 nations worldwide access to an easy to use service that allows them to pay their tuition and room and board costs at over 500 colleges and universities in the United States, Canada and Australia. Founder Iker Marcaide was inspired to create an alternative to existing global payment options when he tried to pay his MIT tuition, which took nearly two weeks and required the payment of additional fees to finally complete.
The $22 million round was led by Bain Capital Ventures. Previous investors have included Spark Capital, Devonshire Investors, QED Investors and Accel Partners.
“The cross-border payment space is highly inefficient and overly expensive, offering a significant opportunity for innovation and values creation,: said Matt Harris, Managing Director at BainCapital, who will also join the company’s Board of Directors. “peerTransfer’s breakthrough was to design a payment scheme addressing the unique needs an business environment of the recipient, in this case, the educational institution. As a result, the risk, cost and complexity of the transaction is dramatically reduce for all the parties. The peerTransfer solution offers incredible opportunities for growth across the education vertical and perhaps beyond.”
The infusion of new funds will enable expansion and support peerTransfer’s ambitions to expand growth to more countries, increasing their reach among colleges and universities and advancing the company’s innovative payments platform.
peerTransfer allows students and other members of their families to send funds to these institutions using their preferred local payment method at a significantly reduced cost. It offers its services for free to the institutions it enables payment for, which has, in effect, enabled peerTransfer to grow very quickly – colleges and universities, in effect, become its marketing engine to students. The platform’s cloud-based infrastructure, along with its growing volume, also means that peerTransfer can offer competitive currency conversion rates. peerTransfer makes it money by taking a cut of the FX fees on each transaction.
“During the first half of the 2014/15 academic year, peerTransfer doubled year-on-year revenus, $1B in cross-border payments processed for the full year,” said Mike Massaro, CEO of peerTransfer. “With this new round of investment, we can embark upon an even steeper growth trajectory by enhancing our course on the educational vertical, building the next-generation payments experience for international students, accelerating growth in international markets, and examining new ways to deploy our cross-border payments platform.”
peerTransfer also makes it efficient for the recipient institution to reconcile payments when received, assuring that payments for services are immediately credited to the appropriate student’s account. peerTransfer’s service includes a 24/7 real time dashboard that allows both students and the educational institutions they pay to track of payments and make reconciliation easier.
As part of its announcement, peerTransfer also announced that it had achieved profitability.
“As an early investor we embraced peerTransfer’s vision of making international payments easy and economical for students and universities – creating an entirely new payment category,” said Alex Finkelstein, General Partner at Spark Capital. “With its enhanced capital base and already strong balance sheet, peerTransfer is poised for even faster growth and expansion.”
peerTransfer has been growing rapidly of late, and according to internal numbers, is adding 50 educational institutions per quarter. Options for payment on the service include bank transfers and credit cards, as well as regional favorites including Alipay in China.