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ePayment >> Modern Times

As tuitions continue to rise, some colleges and universities are revolutionizing the way they accept the big bucks: They’re accepting payment electronically. Whether through online credit card transactions or electronic payment systems that enable students to transfer tuition money from a bank account to the bursar, a growing number of institutions are looking at innovative ways to increase convenience and respond to student demands.

Among these innovators are Indiana University, the University of St. Thomas (TX), the University System of Georgia, Thomas Edison State College (NJ), Bowdoin College (ME), and Abilene Christian University (TX). Here are their stories.

To infiNET, and Beyond

Making good on one’s tuition bill at Indiana University used to be a lot like making good on a parking ticket. The school printed bills and mailed them off to the parents of students. Parents, in turn, would write their checks, stuff them in pre-addressed envelopes, and send them off to a lockbox processor at a bank. Sure, parents could come to the bursar’s office and pay in person, but most opted for the mail.

As a result, the tuition payment process took days, sometimes even weeks, in cases where a parent was delinquent or bounced a check. After years of dealing with unpredictable cash flow, IU school officials set out to change the system forever on most university campuses. The goal, says Barry Walsh, senior director for eBusiness Services, was to find a way for parents to pay tuition faster and boost cash flow across the board.

After building a homegrown solution to handle electronic payments, Walsh improved the solution with QuickPAY, an electronic payment portal from infiNET ( Today, once students register for classes, the portal offers parents two different options for paying tuition bills online: First, parents can pay with a credit card, much the same way they’d order books or music from Alternately, they can pay through what’s known as an Automated Clearing House, or ACH, which is essentially a debit card payment that deducts directly from a bank account. On the back end, Walsh and his associates receive notification every morning regarding how much money was paid electronically the previous day.

The best part? Rather than waiting for check transactions to clear, the money is transferred immediately, and all delinquent payments are the responsibility of the credit provider, not the school. “We were trying to squeeze cost out of the value chain,” says Walsh. “By eliminating human steps in the process, those resources can be directed to something more value-added than collection.”

Eliminating Chargebacks

At the University of St. Thomas, technology officials recently adopted QuickPAY for a completely different reason. Prior to 2005, the school’s only electronic payment option for tuition was credit card payment through its PeopleSoft ( ERP system. Because the state of Texas d'es not allow private institutions to directly charge the credit card “chargeback” fees back to the cardholder without the assistance of a third party (see related story The Chargeback Dilemma), St. Thomas was losing money each and every time a cardholder paid a bill.

At Bowdoin, CIO Mitch Davis and staffers video'd the process of a new employee getting hired and paid, chasing paperwork through 50 steps.

Toward the end of 2004, Treasurer Susan Rose launched an exhaustive effort to find a third-party vendor to recoup the chargeback fees from cardholders, and line up an alternate electronic payment system option to facilitate ACH transactions that deducted tuition payments directly from user bank accounts. The effort culminated in January 2005 with the school’s launch of infiNET technology to meet both needs.

The new alternative had an immediate impact. While prior to the new system, 40 percent of St. Thomas’s students paid their tuition bills online with credit cards, Rose says that with the new mix of ACH payment option, chargeback plan, and eBilling, online payments are up 145 percent, with a 31 percent increase in online credit card payments alone. Rose estimates that more than 60 percent of all St. Thomas students are paying for school without ever writing a paper check.

More importantly, in the first quarter of 2005, credit card costs to the university were down by 81 percent. Rose proclaims this combination of strategies is cementing the effort to drive more students to pay online, eventually eliminating paper and in-person payments altogether. Along the way, she adds, the school has been able to automate many other finance operations, as well.

“Our ePayment initiative has helped to streamline everything,” she says, noting that while the school previously catered lunch for finance employees during registration week so they could work straight through, this year, Rose plans to take the staff out to lunch to celebrate the automated process and the recouped fees. “Providing electronic payment is one thing. Providing it without the fees is something else.”

Federating via TouchNet

When it comes to electronic payments, infiNET isn’t the only option. Over the last few years, institutions have turned to solutions from CASHNet (, Paradata (, and Diebold ( to enable students and their parents to pay tuition online.

Technologists with the Board of Regents of the University System of Georgia have chosen yet another alternative for their 35 colleges and universities: a commerce management system from TouchNet Information Systems ( Some of the larger schools in the University System of Georgia have independently offered different online credit card payment alternatives since the beginning of the millennium.

Now, a new effort spearheaded by John Graham, executive director of Enterprise Systems, seeks to federate all UGA schools, big and small, across the same TouchNet Commerce Management System, which offers both credit card and ACH payment options.

While some schools are still implementing their new payment systems, all schools plan to use it by the end of the year. As Graham explains, the initiative to federate the technology across institutions was driven by four separate business needs: 1) to increase the level of electronic payment options for students, faculty and staff; 2) to leverage the buying power of the university system to deploy an affordable solution; 3) to reduce the cost of settling transactions, offering lower cost settlement options, and potentially implementing convenience fees associated with the use of credit cards; and 4) to increase and standardize the security of critical financial information.

Of these, Graham says the goal to increase security is a top priority. In the past, because institutions chose their own systems for electronic payments, there was no security standard; some systems were more vulnerable than others. In a few cases, Graham admits, banking information was potentially compromised. Under the new system, however, all UGA schools must adhere to top-notch security inherent in TouchNet’s technology.

“Do I think everyone will adapt to this transformation overnight? Not at all. There’s quite an effort that g'es into changing the mindset of a user base,” he points out. “No matter how we look at it, though, for all of us to be unified on one system just makes more sense.”

While the University System of Georgia turned to TouchNet to help manage geographic diversity, Thomas Edison State College (TESC) called upon the vendor to help manage billing and electronic payments for its virtual campus. The school, a state institution with nearly 11,000 students, is a center of distance learning. From its inception in 1972, TESC relied upon telephone operators to register students for classes every other month. Most students would dial into the school’s Trenton, NJ headquarters, enroll, and read off their credit card numbers to an operator at the other end of the line. Some students would employ an even lower-tech strategy— selecting courses from a printed catalog, and mailing in a form with a check. Behind the scenes, operators would transfer billing information to the school’s bursar, who would process it accordingly. The whole process took weeks.

At the University System of Georgia, John Graham says increasing the security of the payment process is a priority. Previously, with disparate systems across campuses, there was no security standard at all.

Then, more recently, CIO Drew Hopkins and Bursar Philip Sanders joined forces to modernize the entire approach and make electronic payments a reality. The duo purchased the TouchNet Commerce Management System, and had inhouse programmers customize it to interface automatically with the school’s Colleague ERP system from Datatel (

In no time, the new system generated so many efficiencies that Hopkins and Sanders redeployed elsewhere three of the four employees who previously spent whole days entering data from phone and mailed payments into the computer. Eventually, these efficiencies opened up other avenues for TESC, too; once managing billing and payment cycles became easier, the school expanded its registration to a monthly schedule (instead of every other month), a move that has resulted in what Hopkins describes as modest but steady enrollment growth.

“We anticipated some degree of enrollment growth with [automated electronic payments], but we never anticipated it so quickly,” says Hopkins. “Never in our wildest dreams did we think our system would be this successful.”

Variations on a Theme

Bowdoin College performed an experiment in mid-2004 that had interesting results. CIO Mitch Davis and some of the school’s IT staffers set out with a video camera to chronicle the process of a new employee getting hired and paid. The video crew followed paperwork from one person to the next, recording every step along the way.

When all was said and done, the tape had recorded more than 50 manual steps—a whopping number even by Davis’s standards, and he was relatively familiar with the school’s antiquated approach. The tape was not for naught; after watching it again and again, Davis embarked on a thorough process review to fix all of the inefficiencies with the hiring system, and with the school’s payment systems in general.

In May of 2005, this effort led the liberal arts school to purchase a pair of new financial software packages from financial management and business intelligence vendor Blackbaud ( One system, The Financial Edge, will tackle financial management by enhancing communication across all monetary and payment systems, and will automate all of the payment processes Davis documented in his video.

Specifically, this is expected to help college officials ensure that the organization uses the annual budget as a management and planning tool to make resources go farther, automate purchasing for tighter control of spending, and decrease the amount of time spent on tracking money it is owed. While the system d'es not yet enable students to pay tuition bills online, Davis says this feature will be available soon, as the school continues to make a transition to the Web-services-oriented .NET infrastructure from Microsoft Corp. (

“It’s our goal to build all of our administrative services around Web Services technology,” he says. “Once we’ve got that in place, our entire approach to payment will be electronic.”

A similar system conversion at Abilene Christian University led technologists to embrace a new billing and tuition payment system from banking giant Sallie Mae ( For years, ACU was using a billing system it had written itself, one that resulted in one bill for families every month. But the system was far from perfect. It required hours of maintenance; performance was spotty.

By 2003, the old billing software was in dire need of replacement. That’s when Gary West, director of Student Financial Services, set out to find a new system. West investigated a number of electronic payment systems, but all of them meant revolutionizing billing to the point of generating two or three bills (for tuition, housing, campus purchases, etc.) each month. Instead, he wanted a new system with minimal change for the end user.

Ultimately, West decided that the best solution was to improve the old ACU system with an electronic billing service from Sallie Mae. The solution, technically referred to as a managed service, has made Sallie Mae’s technology the centerpiece of ACU’s financial applications. The school runs a file that produces a snapshot of each student’s account at the time of a bill.

However, instead of printing bills itself, the school sends these digital files electronically to Sallie Mae, which reorganizes some data elements, prints the bills, stuffs them into envelopes, and mails them out. Sallie Mae receives payments via the US Postal Service and online, and processes every one of them. Most importantly, Sallie Mae agreed to send ACU its money daily, instead of holding the payments for 15 to 30 days to earn additional revenue from interest, as some other vendors do. For end users, the process is seamless. But behind the scenes, West says that switching to this electronic model has made everything about billing and payments easier and more efficient than ever before.

“We’ve essentially outsourced our entire billing and payment functions,” he says, adding that Sallie Mae charges roughly $1 per statement. “Our bills look the same, but we’re handling a fraction of the work we used to, and I’d say everyone is better off.”

See related story The Chargeback Dilemma

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