April 28, 2020
Many British universities rely on Chinese students as an income, since overseas students pay two to three times more in tuition. According to a UnionPay report, Chinese students pay more than 340 billion yuan (US $60.4 billion) every year, with more than 80% going to tuition fees.
But Chinese families have difficulties with the payment process – costly fees, complex terminology and too many payment options means paying tuition is stressful and expensive. British universities can’t really afford to lose those Chinese students, so what can they do to make the payment process more simple? We cover a possible solution in this article.
Currently, Chinese students can pay their tuition fees in various different ways. This is simply because the advice varies depending on who you’re asking: friends, banks, blogs and websites. The plethora of options means that universities don’t use a standard approach, and accept payments through cheques, bank transfers and in-person payments.
Chinese students may opt to pay through a direct bank transfer, which can end up being quite expensive. Others may use HSBC’s RMB to GBP bank transfer – however, this requires opening an account with HSBC. Some families will choose to buy GBP when the exchange rate is favourable, hold onto the currency in their Chinese bank accounts and then make the transfer when the tuition payment window opens. As we can see, none of these options offer simple solutions for Chinese families.
As a tech-savvy section of the population, one would assume that Chinese students would pay most of their fees online. However, this is not the case; only 5% of Chinese students pay their first-year tuition fees online. Why is this happening? Here are some of the obstacles students face.
No standard approach: as mentioned above, different universities adopt different payment methods. This makes it confusing, especially when students will receive different advice from various online platforms and friends.
Language barriers: complicated wording and lack of translation services means that Chinese students and families can get confused easily. Many families end up having to fill out forms in English, without much assistance from their local neighbourhood bank.
Value for money: international bank transfers can come with very high fees, and the payment window for paying tuition is quite short. Chinese families want to get the best exchange rate possible, and paying online makes this more challenging. On top of that, they need to learn how to manage and budget in two currencies at once – an activity everyone can agree is confusing.
Unfamiliar territory: in China, payments are usually processed through apps and QR codes. This is different to the UK, where our banking system is dominated by debit cards and direct debits, which are unfamiliar to Chinese students.
Security: Families and students are worried about the security of their payments. When making a transfer, they need to determine whether they meet the requirements and whether the transfer has been successful. They also prefer paying with QR codes: a much more secure way of transferring money than cards.
According to Flywire, four out of five international students want to be able to pay their tuition online, and that includes mobile. Of those Chinese students, 86% want to be able to pay using their own payment method back home, such as Alipay or WechatPay. Below we determine a possible solution to the issue of international transfers from China.
There’s a solution: what if Chinese students could pay with their own platforms in their own currency? Alipay is one of the most popular mobile wallet apps in China. It functions just like Paypal, where a user sets up their own digital wallet and then links their debit card. In China, they can link their bank accounts to their Alipay wallets. They can then add money to their digital e-wallet and use it to pay for items in-store and online. Alipay is one of the best payment solutions universities can adopt to start accepting payments from China.
How can an institution start accepting Alipay transfers? In order to start accepting Chinese payments, institutions need to set themselves up as an “Alipay merchant”. This is a lengthy process that requires getting the right licenses, approvals and understanding how Alipay works.
The good news is that there is a much easier way. At Pomelo Pay, we are an approved and licensed Alipay partner and payment processor. This means that businesses and institutions can add Pomelo Pay to their payment system and immediately start accepting transfers from Alipay. No approvals, no licenses; just a small transaction fee from our side.
The main advantage of adding Pomelo Pay as a payment system is that organisations don’t need to go through the lengthy process of setting themselves up as an Alipay merchant – we take care of all of that.
This additional feature gives universities a competitive edge: Chinese families are more likely to send their children to a university that makes payments seamless through a platform they are familiar with. This also reduces the likelihood of late payments, since families can easily make the transfer when the time to pay tuition comes.
Another great advantage is that Alipay itself can be used to attract more students. Alipay is not just a payment processor, but a marketplace. Alipay has “mini programmes” that are embedded into the app; these are programmes like Uber and Deliveroo, that allow you to order food and transport. These programmes are also opportunities for universities to market themselves on the Alipay app, just like advertising on Facebook.
There are over 1 billion Chinese Alipay users all with families who want to send their children to the UK. As we can see, this opens up huge opportunities for universities looking to increase their revenue by accepting more international students.
By using a payment service such as Pomelo Pay, educational institutions won’t need to install a new payment system or set up a new type of bank account – it works just like an add-on. Pomelo Pay only charges a small transaction fee, and universities can start accepting Alipay transfers in under a day. Finally, with a payment option such as this one, universities can increase their revenue by accepting more Chinese students in a seamless and fair way.
*Stat taken from UK Council for International Student Affairs
Data Scientist, Jee Yen Hee, discusses the importance of data for businesses in the latest Opinion Series.
The future of shopping is unified commerce. But what does that mean and why should you care? We've put together this guide to help you learn more about unified commerce.