Legacy payment systems hold many colleges and universities back. Today’s fast-paced innovation means that every business must adapt to meet customer demand for digital payment methods as well as technology-enabled interactions. And that includes institutions of higher education. In fact, colleges and universities must transform their payment systems because of their customers: digital-native students.
Although payments play a key role on college campuses as students make payments for meals, books, tuition, supplies, room and board, the payment experience leaves much to be desired.
Legacy Payment Systems Are Costly
The fact is that the current payment operations at colleges and universities cost money. On average, costs equal nearly 3% of the budgets of these institutions according to a recent report from PYMNTS and American Express. However, the true cost of legacy payment systems may be even higher considering the hours employees spend doing paperwork and dealing with errors.
The reason: colleges and universities still use legacy payment systems that can’t meet the needs of their students or the needs of the modern university.
With legacy payment infrastructure, data sits in disparate, siloed payment systems. This makes it difficult for financial leaders to easily access relevant information.
According to PYMNTS:
- 29% of institutions cite the length of time required to receive payments as a major issue.
- 72% of the financial leaders at colleges and universities consider their payment operations only somewhat or slightly effective.
- 27% of institutions say their payment systems are currently not optimized or streamlined for easy checkout.
Students Expect Convenient Payment Experiences
Students, however, expect convenient experiences that are powered by technology. What’s more, they expect convenience across all payment and interactive touchpoints. This includes paying with their phones so that they can track their financial obligations through one online portal or app, according to Adam McDonald, president of TouchNet.
“Whether it’s online or [at a physical] point of sale, they expect a seamless, easy experience that supports all the payment methods,” McDonald told PYMNTS.
But not only do students want to be able to make payments on their phones, they want those experiences to be secure, according to McDonald. They worry about security because they’re aware of the data breaches that schools have suffered recently, McDonald says.
For example, on Aug. 3, 2022, hackers breached the systems of Marymount Manhattan College and accessed students’ names, financial data, Social Security numbers, driver’s licenses, and other sensitive information, according to the report. And about a month earlier, hackers infiltrated the systems of Deakin University in Australia, stealing the personal information of 46,980 students.
Additionally, because students are familiar with such tools as two-factor authentication (2FA) to secure their information on other websites, they expect their schools to offer 2FA as well.
Since college students grew up with the latest technologies, including modern payment options, they expect the same from their schools.
“The stakes of not providing the right solutions are high,” McDonald said in the report.
The bottom line is that if institutions of higher education don’t meet the expectations of their students, “they will risk appearing to be behind the curve and not as technology-forward as they should be,” he said. “As a result, persisting with outdated, legacy payments infrastructures could end up costing schools much more than money: They may start losing students.”
If you want to stay ahead of the curve, contact us for a free consultation. The Arrow Payments team has deep experience in payments technology and can help you navigate the landscape to choose the right tools for your school.