Spreading the word on cashless transactions
Originally published in Gulf News, 31 October 2017
Cashless payments and transactions are on the rise, driven by customer convenience and efficiency. Forty-one per cent of consumers anticipate conducting all transactions through a mobile wallet within five years, according to a recent survey by Ubamarket.
Digital commerce and cashless payments were identified as top government priorities in the UAE Vision 2020. The active drive towards digitisation of government services, including cashless transactions, encourages acceptance — and habituation — of this payment channel by consumers.
Naturally enough, some sectors move faster than others in adopting cashless channels for payment. In the education sector, we have a great example of a high-profile industry that despite being relatively reliant on cash payments stands to gain a huge amount from offering cashless payments to its customers.
With the education market expected to increase in size by 26 per cent to 2020 to the value of Dh9.2 billion, the sector as a whole clearly recognises the importance of digitisation in remaining internationally competitive. However, while schools, colleges and universities have worked hard to digitise the curriculums they deliver to students, their front-line administrative processes in places still place reliance on cash and cheque payments — often to the detriment of fee-payers and students.
For educational institutions encouraging cashless transactions not only reduces administrative time and cost spent handling cash, but also reduces the security risk associated with cash. Cashless initiatives are not just for the benefit of fee-paying parents, but also extend to how students make payments (and are educated in personal financial management) for co-curricular activities, etc, while they are on campus.
In a growing internationally-competitive market, where parents are making significant financial outlays, the quality of the experience goes far beyond the classroom and extends to every aspect of a parent’s and student’s interaction with the school. With a reported cost of Dh1m to educate a child in the UAE, making fees payable online is convenient for parents, and convenient for schools at the same time.
The UAE is quintessentially international, and adept at harnessing innovation — and that means expatriates come to the country with expectations about aspects of education such as payment channels. Cheques — often the preferred form of payment in the education sector in the UAE — bring a great deal of inefficiency with them, on both the fee-payers’ side and on the institutions’ side in processing and reconciling payments.
Anecdotally, it can take up to 30 days from the receipt of a cheque before the school sees the funds in their account. On the other hand, online payments, which are able to be reconciled in real-time vastly increase critical business considerations such as cashflow and scalability.
And provide equal benefit to the fee-payers’ perception of the institution. When there are tough macro economic conditions, it is important that parents are given the option to pay fees in instalments. Digitisation of collections allow such flexibility in payments.
The payment industry keeps on evolving with the ever-changing consumer sentiments and the needs of various sectors. Partnerships between software management providers and online payment aggregators is crucial for accelerating the pace of digitisation.
Innovation in this space is thus a continuous and evolving process. Consumer confidence in cashless transactions helps accelerate the pace of change. And equally, payment technology companies such as Telr recognise the requirements of the education sector and develop features and products accordingly.
This evolution is moving the country to a place where cashless transactions are adopted effectively across sectors to a rapidly approaching point where cashless is the norm.