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Building a grade-A payments ecosystem. Universities and higher education institutions are operating in a challenging environment that demands close financial control, an ongoing quest for efficiency, and continuous improvement in their service delivery.
Read time: 5 mins Added: 26/08/25
Despite this, the higher education sector remains an engine of growth in the UK. For every £1 invested in higher education research, nearly £5 is generated as an additional annual economic output across the UK economy. In most cities across the UK, our universities are often one of the largest employers. They are responsible for educating the future leaders and workforce of our country, undertaking world-class research on global issues, and contributing significantly to the local economy.
The goal of transformation within higher education is the creation of agile and sustainable institutions that are flexible enough to meet the ever-changing demands of our society. Transformation will allow higher education institutions to improve operational efficiency, drive growth, and contend with today’s challenges. Ultimately this will enable them to deliver on their purpose and offer a high-quality experience for students, staff, and suppliers alike.
Transformation can be achieved by investing in a resilient and streamlined payment and working capital ecosystem fit for the modern world. By using such technology as the foundation of university operations, institutions stand to reduce costs, drive efficiency, and eliminate unnecessary expenditure. But what does this digital ecosystem look like in practice, and how can universities develop it to enable a seamless and customer-centric payment experience?
Open for business
Higher education institutions operate a complex web of high-value payment activity. This ranges from receiving tuition fee and student accommodation payments from around the world, through to paying student grants, hardship payments, invoices, and payroll.
Since its inception in 2018, Open Banking technology has continued to revolutionise the way that payments are made across the economy. It underpins our API-powered Embedded Payment solutions, which allow around-the-clock, bank-to-bank payments. By placing these solutions at the heart of the digital ecosystem, payments can be made directly from the enterprise resource planning (ERP) system. This means that it’s now possible to make a hardship payment to a student within seconds or transfer a research grant without delay.
From a student’s perspective, receiving hardship payments quickly through Open Banking-derived APIs can make a significant difference to their financial position. On a day-to-day basis, it’s also important for students to be able to make seamless payments too. Paying easily for food, event tickets, library fees, and sometimes even tuition fees, also enhances the student experience and can help to improve overall satisfaction.
In addition to speed, using Open Banking-derived solutions can represent a significant cost saving. Credit card processing fees generally cost a university between 1.5% and 3.5% of a transaction’s total value – which on a tuition fee payment can be upwards of £100. By comparison, the same transaction made through Open Banking technology, can cost as little as £10.
Kate Manku Head of Higher Education, LloydsHigher education institutions are searching for efficiency in every corner of their operations. Using technology underpinned by Open Banking offers new ways to reduce costs that would have been impossible a decade ago.
Security at your fingertips
Traditionally, onboarding a new vendor could be a resource-intensive and time-consuming process, requiring proof of identity and other paperwork. This task – although essential – could delay or complicate business transactions. What’s more, universities regularly make large payments and need reassurance that their transactions are protected from fraud or error.
Establishing a digital ecosystem enables the use of Confirmation of Payee, an Embedded Payment solution that offers a fast, streamlined, and reliable way of verifying identity. After entering their details, it takes less than a second to corroborate the beneficiary’s account details with existing information. This will confirm that they are the intended recipient of the payment. The automated process eliminates the need for paper-based proof of identity and instead reduces the whole process to several taps of a button.
A world-class payments ecosystem
Universities can benefit from the speed, cost, and security that Open Banking offers, but the benefits extend beyond day-to-day transactions. Open Banking offers a new layer of sophistication to an institution’s payments ecosystem. Integrating payment capabilities directly into university platforms offers transparency across the campus, giving universities comprehensive insight into their cash flow and financial health.
As a result, higher education institutions can gain new levels of clarity and control over their finances through digital transformation. This can help them probe financial operations and identify further areas for optimisation. “In the current climate, it’s important for institutions in the higher education sector to have complete financial control,” said Brian Owens, Director, Transaction Banking Solutions at Lloyds. “This control allows them to make sure that their finances are watertight, helping them to identify areas for cost reduction.”
Brian Owens Director, Transaction Banking Solutions, LloydsThe increased use of Open Banking technology in the higher education sector has been a silent revolution – and there’s so much more capacity for it to further grow.
Making the most of card payment technology
Embedding card payments and expenses solutions into the university’s digital transformation journey can offer further clarity and control over transactions.
University uptake of commercial card solutions now includes the deployment of both physical and virtual cards. Staff can use a simple, quick, and intuitive solution to make card payments, accessed through an app or browser, while finance and administration staff can benefit from increased visibility, pre-approval, and the easy reconciliation of transactions. These solutions eliminate the lengthy processes associated with onboarding one-time suppliers, while also delivering the benefits cards can bring – including rebates and charge-back cover.
Card solutions can also extend Days Payable Outstanding (DPO) by up to c.60 days, improving cash flow and allowing universities to release payments at a time of their choosing to enhance their working capital position.
There is no doubt that colleges and universities will undergo a significant period of evolution in the coming years. Using cutting-edge technology to gain clarity and control over payments across the campus could help in navigating and embracing this period of change.
Kate Manku Head of Higher Education, LloydsThe UK is renowned for world-leading research and pioneering educational establishments. Lloyds can strategically support these institutions as they drive digital transformation and become fit for the future, delivering a best-in-class service to students, staff, and suppliers.
For more information about how you can integrate your payment ecosystem into your digital transformation journey, visit our higher education hub or speak to your Relationship Manager, Kate Manku or Brian Owens.
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