Class, we’d like you to meet real-time payments (aka faster payments).
What are real-time payments?
Put simply, real-time payments are a payment method that instantly takes money out of one bank account and deposits the money in another bank account, 24x7x365. This same transaction carries the payment and remittance data.
While many institutions do post payments to students’ accounts in real-time, this new real-time payment method moves the money immediately as well. These payments run on new rails and move money faster than same-day ACH and credit cards, and are irrevocable, which means no ACH returns or chargebacks. When a student (or parent) submits a payment, they’ll see it immediately taken from their checking account, preventing them from over-spending and overdrafting in the subsequent days.
For higher education institutions, this means improved collections, a reduction in staff time spent collecting and reconciling payments, and greater customer satisfaction.
“Real-time payments have been very popular in countries like the UK, now they’re coming to the United States,” said Colin Adams, Managing Consultant at Lipis Advisors. “In addition to satisfying students and parents, real-time payments also feature lower transaction costs than credit card payments.”
Real-time real-life scenarios
Tuition Payments – The most obvious benefit of real-time payments can be found in tuition payments. Here, parents and students can submit their tuition payments as they normally would, but instead of waiting days for the payment to process, it goes through immediately. This gives families the peace of mind to know their checking accounts are up-to-date and accurate at all times.
Financial Aid Refunds – Students on financial aid are dependent on receiving their money in a timely fashion, and nothing could be better than receiving their money in real-time. Real-time payments allow schools to disburse these payments as they become available, helping to satisfy this large portion of the student body.
Campus Activities – Online payments for campus activities like sporting events or shows can present opportunities for fraud. Real-time payments help to reduce fraudulent activity with stronger authentication. Unlike credit card payments, real-time payments require the consumer to authenticate the purchase through their own bank account.
Real-time higher education payments forecast
According to Lipis Advisors, real-time higher education payments will grow at more than 80% CAGR from 2018-2022.
In addition, it’s estimated that 25% of online bill payments to colleges and universities will be real-time by 2022.
The types of payments that will contribute the most to the shift will be debit card, ACH and check.
The switch to real-time payments is now a matter of when, not if, thus making it imperative that institutions select partners now who can support real-time payments. Getting it wrong could result in having to redo your campus payment systems within two years.
ACI Enterprise Payments Platform 
