International students are critical to UK higher education with their fees keeping many universities afloat amid long term government funding shortfalls. But, with some universities taking payments from as many as 170 nationalities it is almost impossible to keep up with the latest developments in the payments landscape in every country.
At monthly drop in sessions, Flywire’s Global Payments experts provide UK HE finance professionals with updates, and insights on various international student recruitment markets.
Indonesia and Vietnam - the rising stars of international student recruitment in UK higher education:
With GDP growth of 5-6%, a growing middle-class and a high regard for higher education in the UK, Indonesia and Vietnam are both international student markets to be aware of. While the volume of international students from these markets is still low compared to the likes of China and Nigeria, most universities are likely to see numbers increase over the next few years.
Indonesia’s payment landscape is rapidly evolving with increasing adoption of digital payment methods, driven by advancements in technology and regulatory support. Traditional banking remains important but digital wallets, QR code payments, and mobile banking are becoming integral to the daily lives of Indonesians. For international payments bank transfers are popular, as they are across Asia Pacific but they can incur additional fees and cause delays.
Vietnamese payers face more complexity when making international payments. Bank transfers are also popular with Vietnamese payers but both Vietnamese banks and UK universities often require extensive documentation to process these payments. This includes proof of enrollment, invoices, and sometimes even details about the student's academic progress. Verification of this documentation can delay payment significantly.
80% of the payments made through Flywire from Vietnam have the required documentation attached which would indicate a good understanding among Vietnamese payers about the requirements. However, the more critical issue is the levels of proficiency in English among Vietnamese payers, particularly the older generations. To ease this challenge, Flywire provides both written and spoken assistance in Vietnamese.
Nigeria:
Nigeria’s economic situation is a source of ongoing difficulty for UK institutions trying to manage and support Nigerian students who are experiencing difficulty funding their education in the UK.
Read this blog post for background on Nigeria and how to support Nigerian students.
While things have settled since February 2024, the Naira has had a tumultuous 12-18 months. Policy changes have reduced the gap between the official exchange rate-available through Form A-and the parallel rate. But the country has also experienced a rapid devaluation of the Naira, by over 200%, and a period of rising inflation reaching 30%. These factors are severely impacting affordability for Nigerian students studying in the UK.
Now there is less difference between the two exchange rates, more Nigerians are accessing foreign currency using the parallel rate. Consequently, there has been a slight increase in payments coming to the UK in Naira and also in USD payments to the UK, but there has been a significant decrease in Form A payments, possibly from students who relied on the subsidised Form A rates to be able to afford their education.
It is these students who feel the impact of currency devaluation and inflation most. For universities, they may be seeing more students struggling to make their payments and falling into credit control processes. This is backed up by the early findings of Flywire policy benchmarking research that will be released later this year, showing universities are dealing with a significant volume and value of default payments which is impacting their cash flow.
Looking to the future, the Nigerian Central Bank is working hard to stabilise the currency and if their changes work the Naira should settle further. However, while this will simplify payments, the British Council now sees Nigeria as a country with limited growth opportunities and higher risk which institutions should take into consideration for their international student recruitment strategies.
Bangladesh:
The payment landscape in Bangladesh has a lot of parallels with Nigeria. It’s a heavily restricted market for foreign currency; only two purposes are allowed for converting currency: education and medical care. The Taka has devalued by 36% since January 2022 and the central bank in Bangladesh is coming under pressure to float the rate. Recently, a crawling pegging system was introduced in an effort to bring the formal and informal FX markets closer together. However, the critical issue for international students is that foreign reserves in Bangladesh have been falling since September 2021 and now sit at around $20Bn, severely impacting their ability to access foreign currency through official channels.
Students and their families access foreign currency for education costs through the Student File Service via a local bank. Unlike Form A in Nigeria, it is actually quite a quick process, albeit one that requires in-person verification of lots of documentation which can take a few hours or more. The critical issue, however, is whether a student’s bank has the reserves to be able to offer the Student File Service at all. If not, they will have to go through the lengthy process to open an account with a bank that does offer the service. Even if they do this, there is still no guarantee they will obtain the currency they need; it’s possible for a bank to offer the service one day but withdraw it the next because of liquidity issues.
One of the biggest challenges for Bangladeshi students is that they lack alternative payment methods. The typical credit card has a limit of around $500 so those who can’t access foreign currency using the official service often resort to cash payments that pose obvious money laundering risks for institutions.
How can Flywire help?
- Flywire offers flexible installment plans to help universities can support students experiencing financial difficulties and manage cash flow.
- Our Global Payments experts regularly speak to institutions, payers and foreign banks to build a deep understanding of the context, issues, and possible solutions for international student payers in jurisdictions with fluctuating economic situations.
Interested to learn more?
- Join our UK monthly coffee chats to get the latest insights about the payment landscapes and trends in key international student markets
- Register for our International Payments Summit (19th November 2024, Birmingham, UK) to explore the whole international student payment journey in the context of an evolving education ecosystem
- Read more about our powerful Global Payments Network