By Chris Davies, Managing Director of Global Payments
Universities and colleges must face the reality that, although they exist primarily as places of learning, they also need to behave as businesses. For the first time, many of these institutions are thinking about how they can make themselves attractive to students as their potential ‘customers’.
A key driver in the success of any organisation is the amount of cash flowing through it and how customers pay for goods and services. Educational institutions are no different. And the customers – students – are changing the way they pay for things. Keeping pace with this change is vital to ensure long-term commercial success.
One of the key considerations to take into account is the growing trend for plastic to replace cash in everyday transactions. A recent study by the British Retail Consortium found that the use of cash had fallen by 14% over five years, while debit card usage had grown by 11%. This phenomenon is particularly pronounced among young people who are keen to use new payment technologies.
Certainly in the case of lower value transactions, many students now want to pay with a tap of their card, or even mobile, rather than using cash. The smartest campus-based universities are thinking about how to accommodate this trend as they try to engineer the best possible experience for students; in essence creating a cashless campus. This has the added benefit of not just improving campus life, but making it easier, and therefore more likely, for students to spend their money within places such as union shops and bars.
This can be achieved using debit or pre-paid cards, the latter being particularly popular as they are great for budgeting, as it is impossible to spend more than the amount pre-loaded onto the card.
What’s more, pre-paid wristbands can be loaded with cash then worn securely and used to pay for items in the same way as a contactless card. These are perfectly suited to campus-based sporting and music events or end-of-year balls. The terminals that accept contactless cards are also future proofed, as they can take any kind of near field communication (NFC) enabled device.
The most likely area for development is the use of digital wallets stored on apps within internet-enabled smartphones. While consumer adoption of this has so far been slow, this technology is expected to become ubiquitous among the generation approaching university in the next decade, for whom using a smartphone is second nature. This will potentially present universities with a user base that is highly engaged and ready to adopt new technology when it comes to alternative payment methods.
The recent launch of payment app Yoyo was a case in point. Yoyo allows users to pay for things simply and cheaply using their smartphone. While the initial trial covers 32 bars and cafes on the campus of Imperial College in London, the creators believe that a critical mass of users across other university campuses will attract further retailers (and ultimately more users).
The commercial potential for this type of service is shown by the fact although Yoyo is only available to 20,000 staff and undergraduates, around one fifth of them signed-up within eight weeks of launch.
Universities need to consider carefully which apps and services they back in an increasingly crowded and fragmented market. There’s clearly an appetite for new methods of payment among students – so they will come to expect more sophisticated ways to pay as these trends gather momentum in the consumer world. Universities need to take careful consideration of this as they think about how they market themselves to the next generation of tech-savvy students.