A Master Class in Convenience: Faster Payments for Higher Education
Paying for college can be a real pain, and the act of paying tuition itself has not kept up to speed with the times.
According to Aite Group, 40% of tuition payments are made by ACH (electronic check), making it the most popular method of payment for higher education. Yet, these payments can sometimes take several days to process. In a world where college students send and receive over 120 text messages per day, immediacy is key. Especially when large dollar amounts are being spent. Students and parents demand that payment options conform to their expectations of speed, to prevent their accounts from being overdrawn.
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.
See how institutions are preparing in our on-demand webinar - Faster Payments Coming to the U.S – Are You Ready?
Related Blog Posts
Success Speaks: Exploring the Future of Payments Collections in Auto-Finance with SAFCO
When it comes to improving collections, there’s one simple question your organization should ask before embarking on any type of payments project: what does “customer service” mean to our customers?
Success Speaks: UC San Diego Health Transforms Bill Payments to Improve Patient Satisfaction
Primum non nocere, “first, do no harm,” is a Latin maxim that serves as a fundamental principle of the medical community. Essentially, the phrase states that in some cases, it may be better to do nothing than to intervene. For UC San Diego Health, however, intervention was necessary to transform their billing and deliver an improved payments experience for their patients.
Instant and Digital: The Next Frontier of Bill Payment
We’d all like an inexpensive, simple and consolidated way to pay our bills, and we’re seeing a growing list of upstarts entering the market to meet this need. Customer interaction during the billing process is a critical touchpoint to maintain relationships and potentially enhance the customer experience, but third-party solutions that offer enhanced ease of use could get in the way. Companies need to respond with an engaging bill pay offering, which includes real-time payments.
Success Speaks: Blue Cross Blue Shield of Michigan Talks Meeting Member Demands in Healthcare
When looking for a payments success story in the world of healthcare, you’d be wise to turn your attention to the Great Lakes and the work done by Blue Cross Blue Shield of Michigan (BCBS MI). In a recent webinar with AHIP (America’s Health Insurance Plans) and ACI, Faran Farooqi, Strategic Capability Implementation and Operations for Blue Cross Blue Shield of Michigan, shared his insights into how his organization addressed the challenges of today to deliver a great payments experience for their members.
The 12 Biggest Security Threats to Payments
Consumers ask a lot of you in terms of convenience, speed and, above all, security. This puts the pressure on you to offer a pain-free consumer experience that is also highly secure. And when you accept payments, you need to secure all parts of your organization. Here’s an actual example: one major breach occurred when an air conditioning vendor was hacked, allowing hackers to access the corporate network and finally the point of sale network. This highlights the importance of understanding the threat landscape we face today.
High Incidence of Payments Data Theft is Driving Investment in Payments Technology
One in five organizations has experienced payments data theft over the last 12 months per new benchmark data, “2018 Global Payments Insight Survey: Bill Pay Services,” from Ovum.
4 Reasons Why You Must Future Proof Your Technology
What does future proofing your technology mean? In my view, it means preparing your bank to deliver the best customer experience possible--today and tomorrow. Research from Greenwich Associates indicates that the customer experience and ease of doing business are key drivers of loyalty. Extracting value from your technology investments so you can provide a superior customer experience is not only important because of the impact on service, but also on loyalty.
I want to focus on 4 reasons why future proofing your technology is important. These insights are a sneak preview into some of the findings from our upcoming whitepaper produced with Ovum, the annual Global Payment Insight Series.
A Master Class in Convenience: Faster Payments for Higher Education
Paying for college can be a real pain, and the act of paying tuition itself has not kept up to speed with the times.
According to Aite Group, 40% of tuition payments are made by ACH (electronic check), making it the most popular method of payment for higher education. Yet, these payments can sometimes take several days to process. In a world where college students send and receive over 120 text messages per day, immediacy is key. Especially when large dollar amounts are being spent. Students and parents demand that payment options conform to their expectations of speed, to prevent their accounts from being overdrawn.
A Prescription for Profitability: Real-Time Payments Come to Healthcare
When it comes to important numbers in the healthcare sector, you’re probably familiar with 120/80 (that’s ideal blood pressure for the non-medically inclined), but I’d like to introduce you to two more numbers: 15 and 47.
15 is the percentage of healthcare spending due to billing and payment inefficiencies, while 47 is the percentage of patients who would leave a hospital for a better payment experience1.
When Is Processing Payments in The Cloud More Secure?
Back when I started my career, “Jessie’s Girl” by Australian rocker Rick Springfield topped the charts, the federal funds rate was 20 percent and most organizations were reliant upon one or more mainframe computers that were hosted in an internal “computer room.”