Easing out payment vows smartly
July 2015

Easing out payment vows smartly

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Traditionally parents and students have used the banking channels or ‘Over the Counter’ methods to remit school fees and college fees. In this digital age, where around Rs 3 lakh crore annual transaction happens in the education sector, it is imperative that educational institutes elevate online platforms for fee management. Nidhi Sharma of Elets News Network (ENN) talks to industry experts to find out the scope of profits for the target market as well as service providers

Pay-onlineIndia is one of the world’s largest education markets.Around `3 lakh crore annual transactions happen in the education sector. Ironically, unlike sectors like retail, travel, entertainment and food, the level of automation and e-commerce penetration is abysmally low in this sector. It’s astonishing that even the most renowned universities, colleges and schools in India are still collecting their fee in physical mode wherein the payers have to face issues like geographical constraints to travel to institutes, have to stand in long queues and encounter slow and manual accounting. Thousands of schools, colleges, universities and coaching classes across the country have similar arrangements for fee mobilisation. Millions of payers have to face hassle in the current scenario.

Experts opine that today the fee management market in the education sector requires an umbrella solution in terms of online payments. However, in order to integrate payment gateways, educational institutes have to incur a cost in upgrading their websites and technical upgradation.

According to Ankur Sharma, owner of White Sepal Services, which runs feepal, the online platform for payment of fees for educational institutions, says, “The other hurdles is trust deficit, inertia and status quo in the educational institutes.Many educational institutes appreciate the value addition and technological improvement that Feepal brings, but are reluctant to adopt it because of trust deficit and the conventional approach of the decision makers, but now with about 100 educational institutes in our kitty the trust deficit factor is gradually getting diluted.”

In India, there are about 1.4 million schools, and 50 thousand institutes out of these offer higher education. In terms of volume the size of Indian education market is about3 lakh crore per year. The requirement for fee management service providers is to tap this market with focus on the education sector. With pr-schools, schools, colleges, universities and coaching classes, the target audience is enormous in terms of numbers.

Furthermore, 21st century India is bestowed with favourable demographic dividend. As per census 2011 the population below 25 years of age in India is about 55 crore. With literacy rate of 74 per cent, there are around 35 to 40 crore students in various educational institutes across the country. About 13 crore of these are in urban areas where internet penetration is high. This target market includes students in preschools, schools, colleges and coaching classes.

Traditionally parents and students have used the banking channels or ‘Over the Counter’ methods to remit school fees and college fees. While these channels serve the purpose of collecting school fees and college fees, it does put an enormous amount of burden on the administrative personnel of the institution for reconciliation of payments.On the other hand the long queues at Bank Teller Counters, which inevitably operate only on “working” days of the week, thereby forcing working parents to seek a leave of absenteeism to ensure fees are remitted.

Over the years new age banking channels like “Net Banking” have eased this by providing a facility for transferring funds electronically. Though this has eased the burden on the parents’ side, the administrative side continues to put-up with long hours of reconciliation efforts. This entire school fees collection or college fees collection can be a pleasant experience.

With today’s technological advances when people transact millions over stock exchanges, it should be possible for a school fees or a college fees to be collected through an online fees mode that provides the following:

The opportunity lies in the growing size of the education sector – it was worth `3.83 trillion in the financial year 2013, according to rating agency CARE Ltd., Atom Technologies Ltd and Fee counter Online Services Pvt. Ltd are two other examples of service providers in this area.

The trend is more prominent in Tier 1 cities with the National Capital Region leading the pack, followed by cities such as Mumbai and Bangalore.

Gaurav Zutshi, CEO, Money On Mobile, says, “It took 30 years for banks to move to being a digital economy. While it is not an uncontested space, security is paramount when it comes to digital platform for making payments. Therefore,providing bank grade security becomes indispensable.”

“There are competing solutions and both time and money cost can be avoided by having digital platform. I don’t think there is any huge pain which the students or parents are facing presently, so elevating to the digital platform for fee payment will take its own adoption cycle. We are in the early cycle of giving these digital payment option to parents. It has to be done in a collaborative approach with service provider and schools”, Zutshi added.

Kumar Karpe, CEO, TechProcess Payment Services

Kumar Karpe, CEO, TechProcess Payment Services

Growing online fee payment

More than half of the country’s 1.2 billion population falls in the target market for education and hence it widens the scope of growth for the online fee payments industry, says Kumar Karpe, CEO,Tech Process Payment Services

Kindly throw light on the Indian education sector as far as fee payment through the usage of technology is concerned?

India is an important educational center in the global education industry. Using credit cards to pay education fees has picked up in India. The repayment to the card issuers can bed one in lump sum or through equated monthly installments(EMIs). The trend is new and the facility is available at many(but not all) pre-schools, higher secondary schools, colleges,universities and ancillary education service providers such as coaching institutes.

What are the stumbling blocks hampering the growth in this arena?

The major challenge in adopting technology and digitising payments solutions in the education space is the lack of awareness and readiness towards a change. Moreover, technical complexity makes digital implementation in education difficult. Scarcity of relevant technology due to the lack of infrastructure in the suburban and rural areas also poseshindrance towards implementation. Government policies on education need to improve along with the upcoming technologies and advancements in the education space.

How large is the Indian market size as far as fee payment through online portals is concerned?

India’s online education market size is expected to touch US$ 40 billion by 2017. India has almost around 439 million students. Education sector is a wide with exponential growth patterns. This expansion is creating a major need of technological advancements in terms of digitalisation. More than half of the country’s 1.2 billion population falls in the target market for education and hence it widens the scope of growth for the online fees payments industry.

Speaking on the market size and outlook, he said that it is definitely a big market.“There are around 5000 million students and even if each is giving around `1000 – `2000 fees per month,one can easily do the maths to see that the market is very promising. A lot of transaction is happening in cash, but if school gives incentive to pay fees by a digital mode, there will be a change.It will be a win-win situation for both where parents will also save a lot of hassles through the online mode and get regular reminders and updates, and will have access to entire transaction history and the educational institutes will be getting the funds in time to manage their enormous infrastructure.”

Sridhar Pandurangiah, Chief Technology Officer, Sastra Technologies,which provides fee collection solutions on the cloud, says: “We have come along way in electronic fee collections since 2010. We have seen social institutions move their Fee and Subscriptios to the cloud. People expect convenience and choice of payment methods when choosing a payment aggregator. However, The education sector currently is at a very nascent stage when it comes to electronic fee collection. We are likely to see traction in this space when Banks offer payment gateway facilities to them by announcing tieups with payment aggregators . This is because the current banking infrastructure like IMPS, NEFT is designed for Bank to Bank transfers and the education sector needs a choice of payment modes irrespective of the ircurrent Banking relationship. This is offered by the Payment aggregators like ATOM, CC Avenue, citrus, EBS, Pay U, PayU Money, PayTM etc.”

Furthermore, in terms of technology and products, fee management companies are looking to move beyond the core fee aggregation and have a vision to sell other education related products and services on there portal such as summer camps for students, school uniforms,online courses, online test series among others.

Online fee payment market is huge

Vikrant Khorana, Senior Vice President, PayUmoney

Vikrant Khorana,
Senior Vice President, PayUmoney

More institutes moving to online fee collection and parents opting to admit their kids in the institutes providing the facility, informs Vikrant Khorana,Senior Vice President, PayUmoney

Kindly throw light on the Indian education sector as far as fee payment through the usage of technology is concerned?

Indian education sector has seen a tremendous change in last one decade. The most noticeable out of them is the conventional way through which fee has been paid till now. The introduction of online fee payment has helped the parents immensely as most parents are working these days and physical depositing fee becomes a point of concern for them. This has already lead to more institutes moving to online fee collection and parents opting to admit their kids in the institutes providing the facility. PayUmoney has helped the education sector immensely, especially in Punjab and Andhra Pradesh. We have empowered over 6000 educational institutes across India till date.

What are the stumbling blocks hampering the growth in this arena?

Lack of education towards online payments is one block. A majority of Indian consumers are still not aware of the benefits of the online payments. Online payments are still confined majorly to metropolitan cities, regional to an extentand almost non-existent in the rural areas.

How large is the Indian market size as far as fee payment through online portals is concerned?

The market for online fee payment in India is huge. The number of education institutes which have shifted to this payment module in recent times is large.Almost all private education institutes are opting for it and a major chunk or government institutes have also started following the trend. As an estimate there are over 18 lakh educational institutes including government and private in India which is a huge number itself.

What is the future of fee payment through online payments in the country?

With initiatives such as digital India by government of India, the online payment industry has just seen the tip of the iceberg. The impact is going to be at such a level that online payments will become a necessity for any sector, be it education or any other. It has already started playing a major role in the success of any business, with even the Small and Medium Enterprises (SMEs) opting for online payments apart from big merchants. PayUmoney alone empowers over 1 lakh SMEs who have integrated us to grow their business.

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