Digital payments have revolutionized how we conduct financial transactions in India, and the education sector is no exception. With the government pushing for a cashless society, many educational institutions have started accepting digital payments for various charges. In this blog post, we will explore the multiple ways digital payments are being used in the education sector in India and the benefits they offer.

India has one of the largest education markets in the world. There are 1.5 million schools in India with 26 million school-going students. India’s education market is expected to amount to US$ 225 Billion by 2025.

Source: India brand equity foundation

The education sector is diversified, with different types of businesses, payment use cases, and payment mechanisms.

Fee-collecting organization's

  1. Institutes: schools, colleges, and universities.
  2. Private tutorials such as Mahesh, Aakash, etc.
  3. Competitive exam boards NEET, UPSC, JEE, etc.
  4. Online course providers like Byju's, UpGrad, and other EdTech firms.

Organizations that enable digital fee collections

I. Educational ERP (School Management System).

A digital software solution that helps institutes to manage admission, student records, course, fee collection, vendor payments, etc. These solutions are integrated with PA/PG to enable digital fee collection and to pay vendors. Examples of top school management systems: MyClassBoard, EduNext, EduSprint, etc.

 II. Payment facilitators:

  1. Payment Aggregator:
    • Direct integrations with a back end of educational institutes.
    • Integration with ERP or School Management solution provider.
  2. Wallet: These wallet companies enable fee collection for various institutes on their mobile or web apps. (i.e. PayTM, PhonePe, AamzonPay, etc)
  3. Banks:
    • Offline fee collection: parents or students must visit a bank branch to deposit fees.
    • Check deposits by institutes issued by a parent to a student in favor of the Institute.
    • Simple ERP solution integrated with PG. (i.e. HDFC SmartHub, etc.)
  4. Fintech - focused on education: provides light ERP integrated with PG offering attractive payment solutions to pay educational expanse. (i.e. Pay fee with 0% EMI, BNPL, etc)

 Because some fees are one-time and some are periodic, the combination of these entities enables the institute to collect various types of payments (such as admission fees, course fees, examination costs, etc.) at different times.

Payment-specific requirements for education merchants.

1. Payment mode:

  • Credit card/Debit card, UPI, Net Banking, Wallet, Card EMI, BNPL, etc.
  • Payment mode has been chosen based on ticket size. For example, BNPL offers less ticket size than some education credit facilitators.
  • Merchant initiated: Schools offer parents to pay a fee in usually 3-6 installments by collecting PDC upfront.
  • Paying fees via NEFT, IMPS, P2P UPI, and Cheque in favor of the institute. 

 2. Payment channel:

  •  Online: Parents or students pay fees through the institute’s website, mobile app, or a digital payment link.
  • Offline: Cash/cheque deposit via bank branch. Using physical UPI QR code scan with multiple UPI apps.

 3. Settlement & Support:

  • T+2 days is a standard settlement time.
  • Transaction success rate.
  • Integration support & Merchant support.

Benefits of enabling digital payment

Benefits      

Details

Save admin time.                                  

Allowing digital payment saves administrator efforts on processing, manual deposit, and reconciliations.

Record keeping

Payment transaction activity (i.e. invoice, payment receipt, reports of collation ). All records are available digitally when needed for schools and parents. They can also directly download the payment confirmation slip and invoice.

Improve user convenience

Parents/Students can process a payment just like any other online transaction at their convenience.

Reduce late payment

Enabling a digital payment process for chasing late payments results in less payment and reduces school time spent chasing it.

Reduce data risk

Digital collection reduces the risk of manual handling of cheques and cash.

Transparency

Real-time visibility for senior management.

Security

3DS and Tokenisation based digital payment secure sensitive card data.


Conclusion

Digital payments are also being used for other purposes in the education sector. For example, they are used to pay for online courses, purchase e-books, and other educational services. This has made it easier for students to access educational resources, regardless of location.

In conclusion, adopting digital payments in the education sector has brought numerous benefits, including convenience, cost savings, and increased security. As the use of digital payments continues to grow, we can expect to see even more benefits in the future.

Approximately 71 billion digital payments were made in India during the 2022 fiscal year. Compared to the preceding three years, this was a considerable increase. In 2022, digital payments in India were worth approximately 84 trillion Indian rupees.

If you want to learn more about secure payments, read our blog future of Digital Payments.