Responding to New Payment Preferences of Indian International Students

Since post-study work visas resumed in the UK after the pandemic, the UK has once again become a popular destination for Indian students. The number of Indian students more than doubled from 27,505 in 2018-2019 to 55,465 in 2019-2020. And according to the UK Higher Education Statistics Agency (HESA), more than 82,000 Indian students were enrolled in UK higher education institutions in the 2020-2021 academic year.

UK schools welcome the growing demand from India, but they also need to adjust their payment systems to accommodate the preferences of Indian students. In particular, our research shows that Indian students are much more likely than students from other countries to pay their tuition fees by direct bank transfer (41% for Indian students vs. 18% across all countries). And they are much less likely to use a locally issued debit or credit card (14% in India vs. 31% overall).

Despite this preference, most UK schools still try to discourage Indian students from paying their tuition fees by bank transfer. These are a less secure method of payment for both the student and the school, and they increase the risk of money laundering. Additionally, incoming payments often lack key identifying data, such as invoice/student number, making these payments much more difficult for university finance teams to reconcile.

How can you change payment behaviors in a way that is easier and safer for the student, their family and the university? It is important to understand the motivations behind these payment preferences and work to meet the needs of Indian students.

Why do students prefer bank transfers?

The reason Indian students prefer direct bank transfers is quite simple – they are often the most affordable way to pay their tuition fees. Here’s why:

  • High fees for card payments. Regardless of the method used, payments in GBP from international payers are subject to a number of fees. For example, a Goods and Services Tax (GST) of approximately 1% is applied in addition to bank charges for overseas transactions. Indian students are therefore already at a cost disadvantage. There are additional fees for using a credit card, including foreign transaction fees imposed by credit and debit card issuers of between 2% and 3.5% at most major Indian banks, which are much higher than in other countries. So, for students and families looking for a cheaper way to pay, direct bank transfer is the best option.
  • Card Transaction Limits. The Indian government also imposes card transaction limits, which may prevent Indian students from paying full tuition fees by credit or debit card.
  • Personal relationships with banks. Indian students and their families generally have a close relationship with their bank managers and can often negotiate more favorable rates for a direct bank transfer, especially one the size of a tuition fee payment.
  • Use of forex brokers. Although Indian banks offer prepaid multi-currency forex cards, many Indian students prefer to pay their international tuition through a forex broker. These brokers are often able to provide exchange rates comparable to card scheme rates, but at no additional cost. They also offer the ability to convert the amount when needed, potentially at better exchange rates than banks can offer. These payments are then received by UK schools as direct bank transfers.
  • The role of agents. Education agents play an important role in recruiting and signing international students, especially in India. Around 70% of students coming to study in the UK from India do so with the support of an Education Officer. In addition to recruitment, agents often advise students to pay their tuition. That’s why it’s so important for schools to engage agents in student-preferred payment processes. Some schools are expanding their international payment platforms to include features that help agents streamline their own student management process. These can include centralizing student information in one place to easily store, manage, import and export data; send payment notifications; track payments to keep up to date with status; and access to fair exchange rates to protect students from unnecessary costs.

Once universities have properly considered and understood the above motivating factors, they should then work closely with students to help them shift their payment preferences to alternative methods that match university preferences. university. This includes:

  • Work in collaboration with education officers. Indian students and their parents rely on agents to advise them on how to pay university fees. So it makes sense to educate agents about the university’s preferred payment methods. This will allow for a smooth registration process which, in turn, will leave students and their parents with a higher level of overall satisfaction.
  • Make it easy to find information on payment terms. Often, students who are unsure how to pay their fees will first visit their university’s website for assistance. This is especially true for freshmen who have no experience with these kinds of payments. However, very often the information they need is buried in the website and is relatively inaccessible. Ensuring payment information and support is clearly marked, from the homepage and other relevant sections of the website, will increase the chances of students using a preferred payment method.
  • Offer payment plans. If students are unable to make large card payments due to in-country restrictions or because they will be stung by large fees, consider offering payment plans to ease their pain.
  • Offer a simple and personalized payment process integrated with the university registration process. As universities experience an increasingly diverse mix of nationalities within their international student population, it becomes more difficult to meet the payment needs of each nationality and balance them with the needs of the university itself. By using a payment solution that allows students of all nationalities to pay in a university-approved method but also meets their needs, universities can provide students with a seamless experience during enrollment and beyond.

By taking all of the above measures, universities will be able to make it more convenient and less expensive for students to pay their tuition fees with more competitive exchange rates, creating an exceptional and seamless educational experience for their international students. .

By Sharon Butler, Executive Vice President of Global Education, Flywire

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