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How can fintech’s help the international education sector?

Global education institutes struggle to find payment partners to meet their needs.

The Thredd team

July 18, 2024

In higher education institutions around the world the pool of international students continues to grow. By welcoming these students to a new country there can be huge benefits for everyone involved.

Countries and cities with large education hubs benefit form a more diverse society and the students themselves are able to gain new experiences, often learn new languages and have access to world-renowned academics who specialise in the student’s subject of choice.

One of the most highly debated elements of international education is the cost.  Typically we see governments and the media shining a light on the cost for individuals to access higher education,  however there is less attention given to the costs that these establishments incur by accepting international students. These can include:

  • Fees lost due to exchange rate fluctuations when accepting payments from students
  • In the case of a study package; accommodation, food and travel
  • Costs associated with establishing and funding a local bank account for the student

In the realm of payments, there are countless real-world examples of where the movement of people and therefore the movement of money encounters a huge amount of friction.

We spoke to Bruno Vecchio, Director of Business Development at SEDA College to examine each of these issues in turn and discuss the ways fintech’s are solving for the challenges facing this important industry.

Study packages

Language colleges such as SEDA College with campuses in Cork and Dublin, Ireland aim to make the experience as smooth as possible for their students by offering a range of services in addition to tuition. This could include accommodation, health insurance, airport pick-up and additional 1:1 teaching.

Once the student has made their payment to the college, there is then a need for the suppliers of these supplementary services to be paid and therefore many additional transfers of funds, managed by the college themselves.

Traditional payment mechanisms for managing suppliers could include cheque, wire transfer or digital payment gateways set-up by the supplier.

Issues when dealing with a large number of payments that correlate large numbers of students ‘accounts’, can be lack of transparency, time investment, related admin costs and difficult reconciliation.

The perfect use case for virtual cards

There is a growing opportunity for fintech’s to improve this experience through offering modern accounting software solutions or by issuing virtual cards to send payments.

Virtual cards can be used to correlate records of individual student profiles to the outgoing payments for services. Transfers happen and are received in local currency and make use of establish card payment rails. An additional benefit is the enhanced security that card payments provide.

Each virtual card generates a unique 16 digital card number which reduces the possibility of fraud compared to using the same physical card. The ability to implement card and spend controls, for example setting limits on transaction amount, location and validity period, provides an additional layer of security and reassurance for education institutions.

Exchange rate fluctuations

When receiving payments from students around the world there is significant risk of fluctuating exchange rates meaning the final amount received is less than expected. There are various strategies that can be employed to compensate against this risk such as hedging, timing outgoing payments and setting prices in multiple currencies. Each of these options in turn requires significant consideration, planning and financial expertise.

In addition to managing exchange rate fluctuations, education establishments must consider transaction fees and also the financial regulations local to the student in their home country and the location where the funds are being received.

Helping students navigate local financial systems

Once a student arrives at their new location, colleges such as SEDA are supporting their students establish themselves by providing them with access to a payment vehicle, often in the form of a prepaid card.

They understand that gaining access to a bank account as an international student can be very difficult, and often not worth the hassle, particularly if the period of stay is for less than one year.

To seamlessly make payments wherever a card is accepted, both in-store and online as well as having the ability to withdraw cash, prepaid cards have become a popular choice.

 The fintech opportunity

The case for an international student using a prepaid card is strong with benefits including: guaranteed acceptance with no need for a credit check or a credit history in their host country, greater security compared to carrying cash and also the ability to aid budgeting and spend control dependent on the features offered by their card provider.

This demand creates an opportunity for fintech’s who can tailor services to meet the needs of the industry whilst keeping costs and administrative overheads low for the organising education institutions.

For more information on creating payment programmes to support the needs of the international education industry or the many adjoining industries who face similar challenges managing cross-border payments, speak to our team today about how virtual cards could help your business attract new clients.

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