More higher education institutions are migrating to electronic payments, seeking advantages like cost savings and reduced risk of certain types of fraud. But the chief reason behind this trend is that payees — particularly millennials — want to be paid electronically. Students have no interest in cashing checks anymore. In this paper, we review the benefits for colleges and universities of going electronic with their business-to-consumer (B2C) payments, various technologies that can support that effort, and likely payment types to target for migration.
1. PAPER-TO-ELECTRONIC DRIVERS
Saving costs and reducing fraud are among the chief factors driving colleges and universities to electronic payments and away from paper.
2. CUSTOMER SATISFACTION AND THE MILLENNIAL FACTOR
Most college students are early adopters of technology and they overwhelmingly favor using mobile payments over paper.
4. PREPAID CARDS
Prepaid cards can be used for both recurring and non-recurring payments. It is the only payment method that does not require the recipient to have a bank account. Often used for travel per diems for athletics, it gives students easy access to their funds at ATMs and can be used to make point-of-sale purchases. Cards can be reloaded automatically every time a recurring payment comes due.
3. ALIAS-BASED PAYMENTS
Using this method, funds are transferred from one person’s bank account to another’s using the recipient’s mobile phone number. Students are expected to gravitate to this swift and convenient form of payment to get refunds related to financial aid, grants, student overseas travel expenses and per diems.
5. PAPER TO ACH
ACH is a B2C payment option that requires the beneficiary to have a bank account. It is the most cost-effective payment method available, if the beneficiary is willing to share bank account information. ACH is used for payroll direct deposits, as well as for recurring and non-recurring payments.
6. A CONVERGENCE OF INTERESTS
Higher education institutions are migrating to B2C electronic payments driven by the need to cut costs, protect against fraud, and address the preference that students have for being paid electronically. The ideal response to this convergence is for institutions to use electronic disbursement methods such as alias-based payments, prepaid cards and ACH, depending on specific needs of their payees.
- Cost, fraud risk and student preferences are driving colleges and universities to migrate to electronic consumer payments
- Alias-based payments are gaining popularity; funds are transferred from one person’s bank account to another’s using the recipient’s mobile phone number or email address
- Prepaid card applications range from student refunds to travel per diems for athletics to research study payments and more