Each semester, millions of students seek higher education outside of their country’s borders. Offering a wider, global range of tuition payment options is a good way for schools to stand out from the competitive landscape of higher education. But, even more importantly, it can lead to significant cost savings for universities.
International students comprise a large portion of many university student bodies around the world. For example, China sends nearly 1 million students abroad each year while Germany sends more than 120,000.
Neither of these markets rely on credit card payments: In China, 56% of all e-commerce transactions are made by mobile e-wallets like Alipay or WeChat Pay. In Germany, 52% of all e-commerce transactions are made by bank transfers such as Giropay or SEPA.
Local payment methods (LPMs) are the bank transfers, e-wallets, cash-based digital payments and local credit cards. Formerly considered “alternative” payment methods, they are actually the dominant payment methods globally, used in more than 70% of all online transactions.
The U.S., which receives the bulk of international students, is a very card-dependent market. This could explain why 67% of international students worry that they won’t be able to pay their tuition fees using a payment method with which they are comfortable and familiar.
LPMs enable universities to offer an easier payment experience, which is important considering the amount of money at stake.
Accepting a more diverse range of payment methods isn’t just an exercise in improving the student experience; it can also save universities millions in costs. Credit cards typically charge businesses up to 3.4%, while the fees for LPMs can be as low as 1.2%.
Case in point: The University of Southern California, Carnegie Mellon University and University College London on average admitted 11,197 international students per year with a yearly tuition of $52,220 per student. That adds up to over $500 million in international student tuition for each university.
If students pay their tuition using credit cards, those transactions could cost the university as much as $19 million. However, using a local payment method instead, those fees drop to as little as $6 million.
These incremental cost savings will prove vital. For example, in the U.S. 36% of the top universities derive 10% or more of their total annual revenue from international students. In France, around 20% of the students at the country’s top-ranked universities are from elsewhere in the world. Looking at Singapore and Hong Kong, this figure rises to over 30%.
Universities have incredibly pressing matters in 2020 — how to keep students healthy in a pandemic or how to enable remote learning, for example — but every penny counts for finance departments.
International student enrollment in U.S. universities has been on a
Future successes in recruiting students from abroad can offset these declines. Lowering the barrier to entry by accepting a wider, global range of payment methods makes higher education more accessible to a global audience. And it boosts the bottom line. Which is essential, now more than ever.
