The Chinese startup that’s making cross-border payments easier for overseas students

In recent years, China has sent more students abroad than any other country. Yet, for Chinese parents, it is a huge headache to send tuition fees and daily expenses to their children living overseas as the process is typically costly and time-consuming. Fintech startup Easy Transfer is devoted to making the process easier by providing financial services tailored to the needs of overseas Chinese students.

The backstory: Easy Transfer claims to be the largest online financial service platform for international students from China. The company aims to simplify tuition, room, and board payments made to schools. They devoted their first two years to research and development of its tuition payment service. Last year, the company widened its business scope with the launch of a student credit card service in collaboration with Chinese financial institutions.

• Easy Transfer is a payment platform that facilitates cross-border tuition payments for Chinese students studying in North America, the UK, and Australia, along with other parts of the world. It charges customers a fee for every transaction. The six-year-old startup processed transactions totaling $776 million last year.
• In March, the startup completed a RMB 100 million Series B, led by China Equity Group.
• Tony Gao, co-founder and president of Easy Transfer, started the company in 2013 when he was only 19 years old and still a first-year student at the University of Southern California. As an international student thousands of miles away from home, Gao learned firsthand the troublesome nature of the payment processes for tuition, room and board expenses. The experience inspired him to start his own company to solve these pain points.
• The company is headquartered in Beijing and has an office in Boston.

Unique selling point: The company has found its niche serving young, overseas educated Chinese. The market is growing rapidly as more families in China have the means to send their children abroad.

• Traditional international wire transfers are costly and time-consuming for Chinese families. Third-party payment platforms like Easy Transfer aim to simplify the process and bring down the costs.
• Chinese students need a service that allows them to track the funds and process the money transfer in a short amount of time, said Gao. They also need representatives to assist them when issues arise in the process.
• While there are already a few payment services players such as Western Union operating in Easy Transfer’s largest market of North America, they are not tailored to the needs of Chinese students. They are often made to jump through many hoops just to apply for a bank card or open an account overseas.
• Around 85% of Chinese students choose to return to China after completing their degree abroad and many of them come back without having used their own credit card or bank account during their studies. When they return, they find it extremely difficult to take out a loan or apply for a credit card because of their lack of credit history, said Gao.

“People always talk about how financial technologies have the ability to transform lives, yet many well-educated young people can’t even apply for a credit card… this is a very big pain point that we hope to solve.”

—Tony Gao, Easy Transfer co-founder and president, told TechNode

The landscape: Online cross-border payment is not new, yet the market is still nascent.

• Easy Transfer competes with third-party payment operators offering tuition payment services to international students, including Western Union, Flywire, and Paypal.
• A major challenge is a lack of trust in fintech firms among users, according to Gao. Although the Chinese rely heavily on digital payment tools for daily expenses, most still prefer traditional financial services when sending large sums of money across the world and it takes time to win consumers’ trust.

“Issues that payment companies like Easy Transfer encounter are most likely on the consumer end. For overseas tuition payments, which typically go up by tens of thousands of yuan every year, many Chinese parents still have a hard time trusting online platforms that simplify the process down to a few clicks.”

— Bob Jiang, CMS manager for a global payment service firm, told TechNode.

• Western Union was the first player in the cross-border tuition payment business, but what it adopted was a rather traditional wire transfer model,” he said. Shenzhen-based Jiang has years of experience working in the third-party payment industry. He now works with Chinese merchants on global e-commerce platforms, including Amazon, Lazada, and Shopee.
• “Adoption takes time,” said Jiang. “This has happened not just tuition payment services—hotel and ticket booking, as well as e-commerce, also went through years before consumer behavior started to change.”

The investors: The fintech startup is backed by prominent investors including IDG Capital, ZhenFund, and China Equity. According to the company, it is valued at around RMB 600 million.

Present condition: Easy Transfer currently serves more than 100,000 Chinese students overseas, 60% of which are in the US, according to Gao. Customer numbers are growing in Canada, the UK, and Australia, he said. There is still room for growth as the market is expanding steadily. The number of Chinese students studying abroad reached 662,100 last year, up 8.8% from a year earlier, according to the Ministry of Education.

• Even though the company has been running for six years, it only started expanding its product offering a year ago. The first couple of years were dedicated to R&D and cultivating a tuition payment market.
• This year, the company launched a student credit card “Evoke” in collaboration with China Everbright Bank, VISA, and China UnionPay.

Prospects: The cross-border payment is a burgeoning area that’s been gaining a lot of attention, including that of regulators.

• Companies may face more regulatory challenges as the country’s forex regulator intensifies scrutiny on illegal capital outflows amid trade tensions with the US.
• In September, the State Administration of Foreign Exchange published a list of 43 entities suspected of conducting illegal forex activities, according to Reuters. Easy Transfer was reportedly on the blacklist but told TechNode that there was no official announcement about the list nor did it receive any notice from authorities.
• As the market expands, the startup is expected to process $2.6 billion through more than 100,000 payments this year.
• Cross-border payment is an area being disrupted by new innovations, including decentralized technologies. China’s central bank and social media giant Facebook have been looking into digital currency and blockchain technology that could potentially revolutionize money transfers and cross-border payments.