Open Banking: the solution to streamlining student payments

Dan Edelman, Vice President & UK General Manager, Global Merchant Services at American Express

As we start a new year, one of the only things we can be certain of is change. The Covid-19 pandemic has created about a huge amount of disruption and forced all sectors to adapt, pivot and try new things. The education sector is no exception and technology will continue to play a fundamental role in underpinning change, whether facilitating remote teaching or ensuring the right back end processes are in place to support virtual administration.

When it comes to payments, initiatives like Open Banking, and the technology behind it are also driving changes with benefits for both students and staff alike. For students, it’s helping provide a secure, speedy way to pay for things online and on the move, directly from their bank account. And for finance and accounting teams at education providers, it offers them an important opportunity to overcome the challenges associated with financial reconciliation.

Overcoming the challenge of inaccurate payments

It may sound surprising given the comparative size of many financial transactions in the education sector, such as in the form of course fees or accommodation costs, but payment reconciliation continues to be a significant challenge.

The main issue is that it’s usually a very manual process. And, as with any manual process, there’s plenty of opportunity for human error. Often, setting up these payments involves many fields to fill out with long numbers and codes - and it takes just one small slip to enter a number or letter incorrectly. Not only is the process time consuming, but it can also be stressful. Particularly when larger sums of money are involved, like course fees.

Untangling these small errors can cause delays and hassle for both the payer and payee - in this case, the student and education organisations. With hundreds, sometimes thousands, of students paying for different courses and other education costs, reconciling payments can be a significant drain on schools’ and universities’ time.

Why Open Banking is the answer

Open Banking legislation, which allows the secure sharing of financial data, has led to the creation of new technology platforms and products that can help tackle this reconciliation problem currently faced by the education sector.

One such product that is providing measurable results in this area is Pay with Bank transfer, powered by American Express. Pay with Bank transfer launched in September 2019 and leverages Open Banking technology to offer UK consumers a fast and secure way to make payments. It’s one of the first Open Banking initiatives in the UK powered by a globally recognised and trusted brand, and enables users to make payments to a wide variety of merchants directly from their bank account, safely and securely, without the need for a card to hand.

The service can be used by current account holders at major UK banks, from high street banks such as Barclays and HSBC to digital banks such as Monzo. And they don’t need to be an American Express® Cardmember to use it.

Pay with Bank transfer almost entirely removes the requirement to manually enter payment information, by using embedded identifiers that can be instantly matched to the right student account. This makes it an easy, accurate and convenient payment method for students while significantly easing the administrative burden on education organisations.

How Lancaster University is using this technology

One of the UK’s top-ranked higher education institutions, Lancaster University, adopted Pay with Bank transfer in 2020 to help streamline its payments process.

Seeking to empower students and parents to make course fee payments with greater ease and security, Lancaster University turned to Pay with Bank transfer to support this process. Whereas before students would be required to manually set-up and enter all payment information, Pay with Bank transfer has automated the payee set-up. This includes a bespoke integration of student IDs, directly into the payment process. This is pre-populated using information provided and verified by Lancaster University, meaning that each payment is automatically attributed to the correct student account - vastly improving the experience for the University and its students alike.

“Lancaster University see Pay with Bank transfer as an exciting opportunity to further improve our payment experience for students, parents, and alumni, whilst at the same time delivering processing and financial benefits to the university” commented a spokesperson from the University.
And users of the payment tool are no less enthused about its ease and convenience: “I didn’t have to use any passwords to log into either the Lancaster site or my banking app (both utilising face ID) so the process was genuinely one of the best online transactions I can remember doing.”
At American Express, we’re proud to be offering innovative new products like Pay with Bank transfer to help universities and education providers in the UK operate smoothly, safely and successfully this academic year.

For more information about Pay with Bank transfer and how it can support education providers visit our website or email us today.

American Express Payment Services Limited. Registered Office: Belgrave House, 76 Buckingham Palace Road, London, SW1W 9AX. Registered in England and Wales with Number 06301718. American Express Payment Services Limited is authorised in the United Kingdom by the Financial Conduct Authority under the Payment Services Regulations 2017 (reference number 484347) for the provision of payment services.