Meeting the new payment preferences of international students from India

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

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

Despite that preference, most UK schools still try to discourage Indian students from paying their tuition via  bank transfers. They are a less secure form of payment for both the student and the school, and they increase the risk of money laundering. In addition, the incoming payments often lack key identification data, such as invoice/student number, making those payments much more difficult to reconcile for university finance teams.

How can you drive shifts in payment behavior in a way that is more streamlined and secure for the student, their families and the university? It’s important to understand the motivations behind these payment preferences, and work to address the needs of Indian students.

Why do students prefer bank transfers?

The reason Indian students prefer direct bank transfers is pretty simple  – they are often the most affordable way to pay their tuition. 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 instance, a Goods and Services Tax (GST) of approximately 1% is applied on top of the bank fees for overseas transactions. So Indian students are already at a cost disadvantage. Using a credit card comes with additional fees –  including foreign transaction fees imposed by credit and debit card issuers of between 2% and 3.5% at most major Indian banks that are much higher than other countries. So, for students and families looking for a less expensive way to pay, direct bank transfer is the better option.
• Card transaction limits. The Indian government also imposes card transaction limits, which may restrict Indian students from paying tuition fees in full by a credit or debit card.
• Personal relationships with banks. Indian students and their families typically have close relationships with their bank managers and can often negotiate more favorable rates for a direct bank transfer, especially one the size of a college tuition payment. 
• Use of forex brokers. Although Indian banks offer pre-paid multi-currency forex cards, many Indian students prefer to pay their international tuition fees through a forex broker. These brokers are often able to provide comparable exchange rates to card scheme rates, but with no additional fees. They also provide the ability to convert the amount when required, potentially at better exchange rates than the banks can offer. Such payments are then received by UK schools as direct bank transfers.
• The role of agents. Education agents play a big role in the recruitment and signing of international students, especially in India. Approximately 70% of students coming to study in the UK from India do so with the support of an education agent. In addition to recruiting, agents often advise students to make their tuition payment. It’s why it’s so important for schools to engage agents in the preferred student payment processes. Some schools are extending their international payment platforms to include capabilities that help agents streamline their own student management process. These might 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 on status; and access fair-market exchange rates to protect students from unnecessary costs.     

Once universities properly take into account and understand the above motivating factors, they then need to work closely with students to help shift their payment preferences on to alternative methods that align with the university’s preferences. This includes:  

• Work in collaboration with Education Agents. Indian students and their parents are relying on Agents to advise them on how to pay university fees. So it makes sense to educate Agents as to the university’s preferred payment methods. This will make for a smooth enrollment process which will, in turn, leave students and their parents with a higher level of satisfaction overall.
• Make it easy to find information on how to pay. Often students who are not sure how to pay their fees will visit, in the first instance, their university’s website for support. This is particularly true of first year students who have no experience of making these sorts of payments.  However, very often the information they need is buried in the website and is relatively inaccessible. Making sure information and support about making payments is clearly signposted, from the homepage and other relevant sections of the website, will increase the chances that students will use 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, personalised payment process that is embedded within the university enrollment process. As universities experience an increasingly diverse mix of nationalities within their international student population, addressing the payment needs of each nationality, and balancing those with the needs of the university itself, becomes more difficult. By using a payment solution that allows students of all nationalities to pay using a method approved by the university but that also meets their needs, universities can give students a seamless experience during enrollment and beyond.          

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

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