With the rising popularity of P2P (person-to-person) payments through sites such as Facebook Messenger, Slack, Zelle and Venmo, digital disbursements have become to millennials what cash and checks were to previous generations.

This trend toward digital payments is especially prevalent where thousands of millennials gather each year: colleges and universities across the country. Increasingly, higher education institutions are making disbursements via dedicated B2C (business-to-consumer) digital payment systems, which are cheaper, faster and more secure.

Perhaps most importantly, it’s how students prefer to be paid.

Using Digital Payments is a Less Expensive, More Efficient Way to Transact

According to a survey by the research firm CCG Catalyst, only 46 percent of millennials use checkbooks.  Technology is firmly entrenched in this age category: 68 percent use online banking and 44 percent send money digitally. Writing checks to students can be frustrating to both payer and payee—college students change addresses frequently, so contact information may be out-of-date on institutional records. For the university, lost and returned checks cause additional administrative work and costs. For students, payment delays—waiting for the mailed check and physically depositing the check—represent costs of their own.

With new payment B2C digital disbursement technologies, routine payments like tuition reimbursements, travel per-diems and research payments can be paid using an individual’s email address or phone number, which is securely linked to their bank account. A student’s email or phone number changes far less frequently than their residential address, reducing the need for payment duplication. Compared to a physical check, digital disbursements can offer a reduction in end-to-end payment costs by as much as 75 percent, according to a survey by the Aite Group. The impact is significant, as institutions could potentially save more than $1 billion annually by eliminating check disbursements.

Digital payments are more secure than checks

For students and parents alike, security concerns remain top of mind when it comes to financial transactions. According to the 2016 Association for Financial Professionals’ Payments Fraud and Control Survey, checks continue to be the payment method most often targeted by fraud attempts, with 71 percent of companies who use checks experiencing actual or attempted check fraud. Digital payments provide a more secure and private transaction method for the end-user. Importantly, using digital disbursements eliminates the need for the college or university to collect and store students’ bank account information—further reducing the possibility of a sensitive data breach.

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Making digital payments is easy and convenient

Using digital payments provides a sense of ease, simplicity and speed when compared with the more cumbersome method of paying by check. For students, digital platforms remove the step of signing and depositing checks. Millennials in particular value speed, convenience and accessibility across their daily transactions, and having this same ease with digital payments is becoming an expectation among consumers of all generations. For the college or university, digital payments reduce the responsibility of maintaining an inventory of checks, and unnecessarily exposing the institution to check fraud.

Moving from checks to digital payments is not just paving the way for higher education institutions to delight their clients, it is also a way to rethink existing infrastructure and reduce the cost of check processing, inefficiencies and risk. Digital disbursements in higher education institutions are tapping into changes in consumer behavior to reform college payments systems and enable a more streamlined process for students to receive payments anytime, anywhere.

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About the Author:

John Lenckos is senior vice president, Specialized Industries, Bank of America Merrill Lynch and Lynn Wiatrowski, executive vice president, Global Transaction Services, Bank of America Merrill Lynch.


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