A better payments experience for universities
Read time: 5 mins Added date: 13/09/2024
How embedded payments are providing universities with holistic, student-centric payment solutions.
The payments revolution
While many businesses have deeply entrenched payments within their customer journeys – think of taxi fares that are paid through the same app that hailed the taxi itself – universities are now discovering new and innovative ways to make the processing of payments faster, safer and more seamless than ever before. Most importantly, these solutions are putting the student at the epicentre of the payment experience.
One key part of this revolution is the embedded payment. Put simply, embedded payments allow universities to integrate the payment process into their own platforms. As a result, the payment becomes just a natural part of the user journey, providing a smooth and streamlined experience for students and universities alike.
An embedded future
With increasing digital payment preferences, a seamless payment experience is no longer the exception, it’s the rule. Sixty per cent of the global population is predicted to use digital wallets by 2026, with the number likely to be far higher for future cohorts of Generation Z students.
From paying for tuition fees or rent for student accommodation, through to receiving hardship payments or student grants, embedded payments will play a pivotal role in the future of the student payment experience.
In addition, embedded payments carry significant benefits for the universities and their treasury functions, by offering greater clarity and control over transactions and the ability to reduce the risks of fraud.
Through the adoption of embedded payments technology, the University of Salford has been able to streamline processes, mitigate fraud risks, and generate substantial cost and operational efficiencies.
“We can now easily and instantly verify payee details directly from within Teams chats, SharePoint and/or other Microsoft Office apps”
Andrew Crozier, Deputy Director of Finance at the University of Salford
What’s more, embedded payments could potentially offer lower transaction costs compared with traditional card payments. Credit card processing fees typically cost a university 1.5% to 3.5% of each transaction's total – which, on a £9,250 tuition fee payment, can be upwards of £100. Equivalent bank transfers facilitated by embedded payments technology, however, can cost as little as £10 for the same transaction.
From an efficiency perspective, Faster Payments, which underpin the use of embedded payments, have the power to reduce payment times to just a few seconds, improving cash flow and boosting access to working capital.
Since embedded payments can be faster, as well as more efficient and effective for universities, the transition towards mass adoption is highly likely to accelerate over the next decade. Market research firm IDC estimates that by 2030, 74% of global digital consumer payments will be conducted via platforms owned by non-financial institutions. One survey found that while 4% of businesses currently offer embedded payments, 83% have plans to implement them in the next five years.
Lloyds Bank’s own data supports this – we’ve seen a 19.5% increase in the average number of monthly transactions in the first half of 2023 using three of our core Application Programming Interface (API) solutions, compared with the first half of 2022. We’ve also witnessed a 58% increase in the number of active clients using the three solutions over the same period.
Looking under the bonnet
Benefits aside, how do frictionless payments actually work? The engine of embedded payments is API technology. In 2018, the implementation of Open Banking legislation, enabling banks and other financial institutions to share data securely with third parties, paved the way for the adoption of API technology to allow non-financial institutions to embed payment processes into their own platforms. APIs allow the customer’s financial information to flow securely between the platform and relevant banks to make the payment process easy, fast and frictionless.
At Lloyds Bank, our embedded payment proposition is powered by a suite of six API-based solutions. Since our transactional solutions use the Faster Payments service, any payments made using our solutions are completed almost instantly.
Whether you need to process payments at scale, digitise cumbersome processes, enhance security and mitigate risk, reconcile, make and take real-time payments, or pinpoint exactly when funds have entered your business accounts, our embedded payment solutions can make your payment processes smooth, fast and efficient.
Charting the rise of embedded payments
As digital transformation continues to surge through universities, technology enabled solutions will play an increasingly important role in payment processes and, ultimately, the user journey. Considering that embedded payments are already used by many businesses across different sectors, now is the time to be investing in them to maximise their potential for tomorrow.
We expect to see continued growth; not only in terms of adoption of embedded payments, but also in terms of innovation, especially when it comes to the breadth of use cases found for them.
Also on the horizon is an evolution in terms of the range of solutions available, such as account-to-account payments using either QR codes or through a link that can be sent via email or by SMS. In a nutshell, embedded payments will play a crucial role as the industry strives to make payments even quicker, simpler and safer.
While it will be some time before payments powered by APIs reach the ubiquity of card payments, universities are recognising that they can make payment processes smoother and more efficient – the question is, how could you put it into practice?
Contact us today to find out how we could support your university with our embedded payment solutions.