Currency controls in place in countries like Pakistan, China, India and Nigeria leave universities open to money laundering risks and application and refund overload, according to WPM and Flywire.
In a recent PIE Chat Live, university payments company WPM’s director Holger Bollmann said that universities could be putting themselves at risk when accepting payments from international students.
“People are trying to find creative ways of bypassing these controls, for good reason – Nigeria is a good example, as there are daily limits on foreign exchange,” Bollmann told The PIE.
“We often hear stories of Nigerian students find using a black-market method is often safer, quicker and cheaper – and as a consequence there is an opportunity for third parties, sometimes nefarious, sometimes not, to give students options where that payment isn’t controlled by the state,” he continued.
“People are trying to find creative ways of bypassing these controls”
The use of third parties has a knock-on effect for universities, Bollmann explained, as the money often comes through via bank transfer, with barely any descriptor of what the payment is for, it leaves them at a “catch-22”.
Another difficult side effect this leads to is the processing of refunds – when universities are already overloaded trying to find students’ payments that have been made in the first place.
“When it comes to sending those funds back in a timely manner, and the university being sure that the money is going back to the sender, there is a huge amount of potential risk for the university because it’s a bank transfer,” Bollmann explained.
“There are some people that are trying to use universities to launder money – as they will use it because money going through a university then looks clean.”
There is also risk, Bollmann added, for the actual payer – due to the uncertainty that the funds will come back in time, and that it will be the right amount – especially if fees were taken by third parties or agents when the money was first paid.
“Students are potentially being encouraged for forced to use bank transfers, in many cases by virtue of what’s being recommended”
“Most of the problems relate to these currency controls. Because of them, students are potentially being encouraged for forced to use bank transfers, in many cases by virtue of what’s being recommended – either by agents, peers, or even the family as that’s what they may use for other payments,” Bollmann said.
“It has, potentially, a huge impact on the perception of a certain university, whether the students ends up attending or not – someone could give feedback and say ‘don’t go to X university; I had a terrible experience in regards to getting my money, never mind returning it.
“But in reality, that delay was all for a legitimate reason and due to the way the payment may have been made in the first place,” he added.
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