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E-BILLING
E-Payments: Why College and Universities Buck the Latest
Trends
Chances are, over half of you have paid at least one bill electronically this past month - through a biller’s website,
on your bank’s online payment site, or via an online bill consolidator. A shift in payment dominance occurred as far
back as 2002, when paper checks fell to electronic methods, reports the Federal Reserve Bank of Philadelphia. Since that
pivotal year, electronic payments have continued to rise at a steady pace, with current research indicating that cash
and check are garnering only an approximately 45% share of total US payments, whether purchasing in stores, over the
Internet, or paying bills.*
According to the
American Bankers Association (ABA)
Consumer Payment Preferences Study, in the area of bill payment, – where checks were king – checks now account for less than
half of consumers’ recurring (i.e. monthly) bill payments – 49% – down from 60% in 2003. A major contributor to this
consumer shift toward electronic payments is the rise in electronic bill presentment and payment (EBPP) usage.
The trend of increasing electronic bill payments over paper-based
payments is projected to continue at a CAGR of 20% between 2004 and 2007. In the ABA payment study, of those who plan to use
fewer checks, 29% cited switching to electronic payment options instead.
 Despite these impressive statistics, the future rate of electronic payments may have already arrived on U.S. college
and
university campuses. Based upon interviews RC Communications conducted with higher education business officers across the U.S.
in January, 2006, schools offering EBPP are experiencing upwards of 65% of total tuition and fee payments collected
electronically from students and parents. Another way of looking at this remarkable statistic is to recognize that college
campuses are actually leading the way to successfully implementing electronic payments in the United States.
Why is
the use of electronic payment methods so high on college campuses? The primary driver is the degree of online transacting
already happening on campus. Many schools now offer online registration, electronic refunds, financial aid websites, let alone
the college’s e-mail system and website resource. When students are accustomed to transacting online with their university,
viewing and paying their tuition and fees bill becomes simply a next phase, as opposed to “the next new new thing”. The most
fundamental driver of all is the fact that college students are, quite literally, online all the time. In a recent study of the
online habits of college students, online research consolidator, eMarketer, reports that 98% of college students report having
made a product or service purchase online. These “Net Generation” students who have grown up using Netscape in grade school hold
the power to single-handedly change the landscape of online transacting – and drive electronic payments in the process.
But
colleges and universities that rely on Mom or Dad to foot the tuition and fees bill can’t relax just yet. Next issue,
e-Business Officer Update will look at the varying payment behaviors among different age groups and type of bill paid and
how business officers can influence them to take the electronic payments path.
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