International payments – one size doesn’t fit all
“Currency regulations vary greatly…and agents may find this challenging when navigating the waters of new source countries”
Globally, the middle class is rising, and with it so too are the number of students able to study and live overseas for the first time.
While this rise has been amazing for education standards globally – as well as the economies of many countries – it has created some challenges for education providers and agents in terms of managing and facilitating global payments. With new countries entering the international education arena, it’s important to be aware of such intricacies and plan accordingly.
Here are some thoughts on the inner workings of the global payments landscape, and why a one size fits all solution may not be the best approach to working within these markets.
Currency regulations vary greatly between different countries, and agents may find this to be a particularly challenging area when navigating the waters of new and emerging source countries. Countries like Canada have a free-floating exchange rate, with no currency controls on money that’s flowing in and out of the country.
But with many international students coming from developing countries, there are often currency controls imposed to stabilise emerging economies. Some countries also have strict rules in place around the volume of funds able to be sent out of the country.
Such rules can vary greatly, with China imposing a limit of US$50,000 in a year, while India has limits of US$250,000 per year. These limits have a real impact on students and their families and should be taken into account when seeking payments from international students.
“With many international students coming from developing countries, there are often currency controls imposed to stabilise emerging economies”
An emerging player in the international education market is Nepal. A growing student-aged population has seen its international student numbers in Australia increased by 54% in one year alone. The country has an extra layer of complexity for students wanting to export funds overseas to pay for their education – a No Objection Certificate.
These certificates are a government requirement, where Nepalese people seeking to make payments to international education providers need to gain approval from their government to do so. While this doesn’t make international payments a straightforward process, it is an important aspect of the payment landscape that is unique to Nepal and needs to be accounted for as more students from this country choose to study overseas.
While countries like China have Alipay, China UnionPay or WeChat Pay as online payment tools for international transfers, many emerging markets, such as Vietnam and India, do not, and instead require manual steps in the transfer process.
In Vietnam, the banks require proof of a family relationship to be established when a payment for international study fees is not made directly by a student or agent. A birth certificate or family book are two means of providing such evidence, with students required to prove a family connection to those paying their fees. India also has strict guidelines around transfers for student fees, with the Reserve Bank of India mandating that people paying for international fees complete an A2 form or LRS declaration. The Liberalised Remittance Scheme (LRS) declaration was introduced in February 2004, and outlines strict guidelines for students – and their family – wanting to make payments overseas.
While many global economies are becoming unified in their approach to payments, the growth of international student numbers has seen the spotlight thrown onto the financial practices and regulations established in emerging countries and their economies. While one size will never fit all when operating in these markets, partnering with a global payments service to leverage their networks and country-specific knowledge can enable educators and agents to better support their international students in paying for their education costs.
About the author: Mark Fletcher is CEO and co-founder of Cohort Go, a leading edtech company that connects the international education community. The Cohort Go global network includes over 2,000 education providers and agents and more than 90,000 students from over 180 countries.