The higher ambition at Higher One Holdings is to facilitate higher education payments. The company provides payment processing and disbursement services to colleges and universities and their students. Designed to make financial transactions in higher education settings more efficient, the company's suite of offerings includes OneDisburse, which more than 500 US schools use to electronically distribute financial aid and other funds to students. For students, it offers the OneAccount banking service, a deposit account and debit card. The company also provides online billing and payment services to make tuition payments convenient. Higher One Holdings went public in June 2010 after several years of steady growth.
The company raised some $171 million in the offering, which it used to pay down debts and other obligations. By taking itself public, Higher One expects to further expand its market position as a service provider in the higher education industry, targeting schools whose in-house disbursement and payment systems may be outdated or inefficient. It has also been pursuing cross-selling opportunities presented by its 2009 acquisition of CASHNet, a provider of cashiering and payment services for higher education.
Since its 2000 inception, the company has experienced overall growth in revenue, cash flow, and net income. The majority of its revenues comes from ATM, intechange, and other service fees charged through its OneAccount service for students. Other revenues are generated from convenience fees charged to parents and students who make online tuition payments and annual subscription fees charged to schools. Recent federal legislation has passed limiting bank overdraft and related fees, which translates to lower fee-per-account revenues. However, Higher One has continued to land new schools, expanding the number of accounts it services, so those revenues are still growing.
Higher One sells itself as a "one-stop shop" of technology and payment services to keep a leg up on such competitors as Nelnet, Sallie Mae, and TouchNet, which offer similar payment software and services. In addition to serving student banking needs, it addresses the needs of its educational institution clients by helping them to streamline administrative processes, reduce paper and other expenses, and remain compliant with federal regulations governing financial aid transactions. Higher One's strategic attention to customer service and brand development has helped it grow a diverse base of clients.
The company partners with banks to provide depository and other services for its OneAccounts. Previously, it worked solely with The Bancorp Bank, but in 2012 Higher One established new agreements with savings bank Urban Trust Bank and Wright Express Financial Services (an industrial banking subsidiary of Wright Express Corporation) to provide the same functions. The company plans to secure more bank partners in its shift away from using a single provider.
Private equity firm Lightyear Capital invested in Higher One in 2008 and helped take the company public. It owns 26% of the company and has board representation through director Stewart Gross. – less