Mike Massaro is the CEO of peerTransfer, the leading cross-border payments company currently serving foreign students attending colleges and universities around the world. Based in Boston, peerTransfer enables international students from 200 countries and territories to pay their tuition, room and board at over 750 educational institutions worldwide.
What according to you is the key concern the remittances industry is facing and how do you plan to address this?
First, the digital era means that Markets and Industries have become truly global. Consumers want and need to be able to send, hold and spend money globally – without borders. Remittances make up only a portion of the growing demand for global funds movement and “borderless money.”
Second, there is a big misconception that “one size fits all” when it comes to cross-border movement of funds. Legacy companies such as Western Union and MoneyGram have been slow to adapt to the digital era, leaving new entrants like Xoom and TransferWise to innovate in traditional remittances.
peerTransfer is already developing cross-border processing and payment solutions that make money borderless. Consistent with the notion that “one size does not fit all,” peerTransfer has chosen to focus initially on the unique needs of the global education vertical. We offer a tailored online solution for our Clients (schools) and Consumers (international students) that makes international tuition payment simple, convenient, and frictionless. These transactions are large-ticket, well-documented, and safe – but they require the trust of both the institution and the user. Students can pay in their local currency, using payment choices that include bank transfers, credit and debit cards, and e-wallets. peerTransfer also offers currency conversion rates that can yield significant savings vs. traditional bank FX rates, and we do everything with full transparency and great service.
We intend to leverage our platform across new verticals with similar characteristics, as well as offer additional products to users within these verticals -- making money truly borderless.
How to do you see the cross border remittances market transforming over the next 5 years?
Related to the above, not all cross-border payments and remittances are created equal. There are many different corridors (sending and receiving countries), as well as different use cases that are defined by the reason a consumer needs to send money or pay a bill cross-border. But again, let’s broaden our category definition to Cross-Border Money Movement. With such a wide variety of use cases in play, it’s unlikely that a one-size-fits-all solution will evolve for cross-border money movement anytime soon. This is especially true when it comes to large-sum payments.
Some common themes are emerging. For example, there is a growing segment of people around the world – a group we sometimes refer to as "global citizens" – who have a strong need to move, access, hold and spend money around the globe and transact cross-border with some frequency. Many of these consumers are affluent travelers, but many are also citizens living and working in one place, while continuing to travel to, do business with, and send money to other countries as part of their daily existence. As peerTransfer and others begin to bring the barriers inhibiting friction-free cross-border commerce down, the volume and ease of cross-border money movement will grow at an accelerated pace. Cross-border commerce and money movement is complex; it's up to peerTransfer and others to alleviate this complexity for both the sender and the receiver.
PeerTransfer focuses on tuition fees transfer globally. Why this customer sub-segment and what other sub segments do you think have good potential?
peerTransfer was born out of the experience of the company's founder, who repeatedly found it difficult to pay his MIT tuition bill each time he attempted to send funds from his home country of Spain. It turned out that his funds were sitting in MIT's bank account the whole time, but no one – MIT, his bank, or the founder -- could figure this out. So he joined together with some leading payment executives and developed a solution that offers a better solution for millions of consumers making education payments around the world.
We have been successful because our solution is simple and elegant, offering FX conversion rates that can be dramatically lower than rates offered by home-country banks. We do this with full transparency, 24x7 support and convenient mobile payment tracking for consumers who come from over 200 different countries and territories.
There are many other industry segments for which cross-border payments play a growing role. We are looking closely at a few in which large-dollar, cross-border payment solutions are important for client institutions and their consumers. Each of these verticals faces challenges similar to the ones we encountered in higher education 3-4 years ago.
How big is PeerTransfer? How many universities have you partnered with and in which countries?
peerTransfer began processing payments in 2011, handling $200 million in tuition, room and board payments globally. During the most recent academic year, we processed over $1 billion in payments around the world. We are doubling in size each year and will do so again in the new academic year.
Today, we serve over 700 schools across 12 countries, the vast majority of which are in the U.S. We are by far the largest processor of international payments for institutions here in the U.S., the #1 destination for international students worldwide. We're aggressively expanding in the UK, Europe and Asia-Pacific.
We offer students from over 200 countries and territories around the world the ability to pay in over 100 currencies. Our intention is to be the #1 source of tuition payments made by foreign students from around the world, wherever they choose to do their international studies. We’ll process payments in all areas of education including Higher Education, Language, Preparatory and Boarding, Culinary, Vocational, etc.
What other geographical regions do you plan to expand your services to?
We operate in a marketplace that is global. Consumers make payments through peerTransfer from over 200 countries and territories. We’ve made it our business to understand the unique needs of this broad payer base so that we deliver on our promise to our client schools. Payment forms, in general, are evolving rapidly -- and the ways that students pay for their education around the world differ significantly. For example, in China, students use bank transfers, Alipay, and China UnionPay. In the UK, the methods are very different.
As our business grows, we are constantly looking for ways to implement our solution more rapidly for our client schools, and to localize support teams to scale the business and enhance service. 62% of our international student population today originates from China, India and South Korea. Having an active presence in those markets and offering a payment solution that is tailored appropriately will be critical to our future success.
How is PeerTransfer different from the incumbents such as Western Union and MoneyGram in this space who also offer a similar solution?
Western Union and MoneyGram are large, successful, legacy money transmission companies offering many services that operate on a few very large platforms. These services include cross-border transactions for consumers and payments to anyone around the world. For these firms education is simply one vertical for which these services are offered, with minimal customization made available to satisfy unique client or customer needs.
peerTransfer's approach has been vastly different. Our solution was specifically tailored to meet the needs of our Clients (educational institutions) and the growing # of Consumers (international students) attending these schools. As a technology-based company with no legacy platforms, we are constantly iterating, improving and advancing our solution. This unwavering focus on innovation is something that is difficult for legacy-based companies – with legacy platforms, standardized processes, and long prioritization cues – to do. We'll take the same approach as we enter new verticals. One size does not fit all; not in cross-border.
What other value-added services apart from tuition fee transfer do you plan to launch? Have you thought about P2P loans to fund education?
Students, parents, schools and industry partners continually approach us with ideas for financial products and services we could launch, but we have a clear roadmap of improvements we want to make to our core product that are top priority for us now.
Mobile remittance is transforming the way people remit money? How do you plan to use this to your advantage?
Unlike traditional small-dollar amount remittance companies, our transactions are sizable in nature, often 10, 20 or even 100 times larger than the average transaction size for companies like Western Union, MoneyGram, Xoom or TransferWise. We offer the ability for users to pay through web and mobile today, but the majority of our consumers transact from a computer due to the large ticket size and importance of the transaction – as opposed to traditional P-to-P and gifting. We of course will continue to invest in mobile, but it’s not a huge priority for peerTransfer or our users at this time.