The true cost of neglecting payment options for universities

How local payment methods can help to reduce costs

Despite the pandemic, the UK saw growth in the number of international students applying to study over the last year. A record-breaking 44,300 undergraduate students started at a UK institution in September 2020  – a 9% increase on the previous year. From this, we can see that despite COVID-19, the UK is still a strong choice for those who look abroad for their studies. This, however, is a fraction in comparison with the US; a nation that welcomed 1m international students in the 2019-2020 academic year. For other countries such as France, around 20% of the students at the country’s top-ranked universities are from elsewhere in the world, and for Singapore it’s over 30%.

One thing that unites international students, no matter where or what they’re studying, is how they will pay their tuition and fees to their chosen places of study – something that has sparked concern amongst many. In fact, a survey in April 2020 found that 67% of international students worry that they won’t be able to pay for their tuition fees using a payment method with which they are comfortable and familiar.

With this in mind, universities must consider how they can leverage local payment methods not only to support students, but to unlock significant cost savings.

 The power of choice post-COVID

As a result of the pandemic, competition has increased for those who still wish to study abroad. As recently as July 2020, we have seen evidence of this as Deutsche Welle reported that the German higher-education sector is already making plans to entice students who may be having second thoughts about attending British or American universities.

Students will be carefully considering all angles when making their decisions – including how they pay. By providing a diverse range of local payment options to include those that students are most comfortable with, universities can prove they’re keeping up with the latest preferences and supporting their students rather than giving them an additional obstacle that they need to overcome.

A saving that universities can’t ignore

As well as the student experience, universities can also consider the saving benefits that local payment options can bring. Credit card payments, for example, charge the receiver up to 3.4% whereas locally preferred payment methods often charge as little as 1.5%. In fact, card payments can result in millions spent every year that could otherwise go towards expanding the university and its research – something incredibly important on the global stage.

Typically, international students are expected to pay a premium over local students. When you consider some of the most expensive universities in the world – such as the University of Southern California, Carnegie Mellon University and University College London – the average amount of admitted international students are 11,197 and the costs per student are roughly US$52,220 per student. In total, this would be over US$500 million in international student tuition for each university.

If a student was to pay their fees using credit cards, the university would be looking at US$19 million in transaction fees, compared to as little as US$8.7 million when using a local payment method – think of what else those funds could do for a university.

One university in Singapore decided to use a local payment method, Alipay, for their Chinese students. Alipay fees are lower than typical card fees at around US$3-4%. By enabling Alipay, the university only paid around US$191,353 in fees. Should they have only accepted credit cards, they would have had to pay approximately $478,382 in fees.

With UK universities facing possible financial disaster – with estimated losses ranging from £3-19bn in 2020-21, an ‘every penny counts’ mentality must be taken to ensure a steady recovery.

The new normal, in more ways than one

Universities need to understand that local payment methods are becoming the global norm. A large majority of international students come from China, where nearly 1m students travel abroad to learn. When considering payment methods, it’s worth noting that in China, consumers pay 78% of all digital transactions with something other than a credit or debit card. In India, that figure is 68%. Despite this, 59% of online transactions in the US are done so using credit cards, alongside 56% in the UK – both countries have a large number of international students, which therefore means they could be missing out by only using certain payment methods.

By disregarding this information, universities are doing themselves a disservice; they will appear stuck in the past and be less inviting to potential students. Not only that, but they are also throwing money down the drain.

For universities and the payment service providers that support them, partnering with a provider of local payment infrastructure can be the most effective means of creating a diverse local payment offering. By taking advantage of local payment knowledge and expertise, universities can overcome the costs and complexities associated with payment integration as they welcome the next generation of international students.


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