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How Open Banking is Helping Universities Better Manage Student Payments

Dan Edelman, vice president and UK general manager, global merchant services at American Express

This new academic year has already presented a number of unprecedented challenges for universities and other education organisations across the UK, with student wellbeing paramount. And rightly so.
As a result, student life on campus this year looks and feels different, even in ways as small as a greater emphasis on contact-free and more hygienic payment methods. And when it comes to payments, Open Banking – and the legislation behind it – is helping to facilitate these changes, offering students new, fast and secure ways to pay to pay for goods and services online and on-the-go, directly from their bank account.

But it’s worth noting that the Open Banking technology behind these new kinds of payment solutions is also bringing benefits for universities and other education providers themselves, offering a valuable opportunity to help them overcome the challenges associated with financial reconciliation.

The problem of payment reconciliation

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. Even when making payments which can run into thousands of pounds, students and their families are required to undertake the set-up process for these payments themselves, manually adding payee details and identification numbers. This is not only time consuming, but also opens up the process to human error. Student IDs or other identifiers can be easily entered incorrectly into payment systems, making it much harder for universities or colleges to ensure the payments are correctly matched to the students and courses they should be credited to.

Matching inaccurate or unaccounted for payments made by students and their families to the right student ID can cause financial headaches and burdensome levels of admin for students and universities alike.

How Open Banking can help

Technology platforms made possible by Open Banking and the secure sharing of financial data can tackle the payments problem, by facilitating safe, fast and accurate payments in the education sector.

New products like Pay with Bank transfer, powered by American Express, are providing tangible results in this area. Pay with Bank transfer launched in September 2019 and leverages Open Banking technology to offer UK consumers a real-time payment option. 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 directly from their bank account, safely and securely, without the need for a card to hand.

This service can be used by current account holders at UK major banks, from high street banks such as Barclays and HSBC to digital banks such as Monzo – regardless of whether they are an American Express® Cardmember.

Pay with Bank transfer helps ensure payments to education providers can be made quickly and securely. It also facilitates more accurate payments, using embedded identifiers that can be instantly matched to the right student accounts, providing an efficient way to facilitate education payments, whether course fees or rent for student accommodation.

Lancaster University and Pay with Bank transfer

Lancaster University, placed in the top 10 of three major national university league tables, is one education provider utilising this technology to improve its payments process.

They integrated Pay with Bank transfer into their payments process in 2020, to enable students and parents to quickly and securely pay course fees online. It has automated the payee set-up – meaning there is no set-up required by students or their families – and includes a bespoke integration of the student ID directly into the payment process. This is pre-populated using accurate and confirmed details from Lancaster University, ensuring payments are automatically attributed to the correct student account.

“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 please visit www.americanexpress.com/pwbt or email paywithbanktransfer@aexp.com

American Express Services Europe Limited. Registered Office: Belgrave House, 76 Buckingham Palace Road, London SW1W 9AX, United Kingdom. Registered in England and Wales with Company Number 1833139.

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