Case studies

Idaho State lowers costs and speeds delivery with innovative refunds solution

Idaho State improves the disbursement process with TouchNet.

The timing of refunds was negatively impacting the student experience at Idaho State and the cost of refunds—especially printed checks—was weighing on the administrative budget.

Idaho State semesters begin on Mondays and disbursements are sent 10 days before, on a Friday. For refunds sent via paper checks, there's inherent delays due to printing and mailing. Students need their refunds to make necessary payments before the start of the semester but they are not received until the day before the semester, at best, or days after it begins, at worst.

The total cost of the refund check process for Idaho State—printing, mailing, the cost of returned and unclaimed checks, and staff hours to manage the process—was $6 per check, substantially more than other payment methods cost per transaction. In addition, managing the check process requires staff attention during one of the busiest times of the semester. Checks also carry a higher risk of fraud than other payment methods.

The alternative to checks for Idaho State were Automated Clearing House (ACH) payments. To receive a refund via ACH, a student provides their checking account information and authorizes an electronic direct deposit of funds. Unfortunately, students frequently do not know their checking account and routing numbers. They enter their debit card information in error and the transaction fails.

If a student does provide correct account information, there is a two to three day wait to receive their funds. With a Friday disbursement schedule, the funds are not received until the following week. ACH is faster than printed checks but still delayed.

One of the questions we always get is, ‘where’s my refund? I need money to buy books,
pay rent, and get all the supplies I need before the semester starts.’

— Weston Whitworth Assistant Controller at Idaho State University

Newer, better options for disbursements

In the 2019-2020 academic year, Idaho State set institution records for their highest total number of refunds and total value of refunds processed. The longstanding issues with refund timing and cost were amplified by the rise in volume, and administrators were looking for ways to improve the situation for all involved. They noticed how payments in general had become increasingly paper-less and began researching what digital options were available to them.

In the summer of 2020, Weston Whitworth, assistant controller in student financial services, led the effort to find a new solution. Whitworth ran estimates on check printing costs and transaction savings by going digital. Along with the practical benefit to students of quicker refunds, the estimates convinced Idaho State administrators to try new digital processing methods.

Original Credit Transactions address today’s issues

Idaho State implemented a new payment method called Direct to Debit via Original Credit Transaction (OCT) in their TouchNet eRefunds solution. Often marketed as Visa Direct or Mastercard Send, OCT enables fast, direct transfer of funds to a cardholder’s existing debit card. In the Idaho State payment portal, students provide their existing debit card information, the institution pushes funds directly to their account, and students receive the money within a couple of hours.

The costs are only a few cents more per transaction than ACH but the OCT is delivered in near real-time while ACH takes two to three days. Compared to printed checks, OCTs cost Idaho State $5 less per transaction, a reduction in cost of over 80%. In the first year of implementation Idaho State has processed thousands of OCT transactions and printed significantly less checks. Students enjoy the speed of the disbursement while the institution estimates cost savings of over $50,000 so far and expect a 50% increase in OCT enrollment from year one to year two.

According to a Visa study 9 out of 10 consumers prefer OCT over ACH. Because of their use of apps like Venmo and Zelle, students are familiar with and expect the fast and convenient experience provided by OCT.

Students also enjoy the quick and simple sign-up to receive OCTs. “It is easy to set up,” says Whitworth, “a student goes to Student Account Center, then refunds, clicks on Direct to Debit, enters their existing debit card information, and it is ready to go.” On the back end, administrators enjoy the quick, streamlined processing of payments and integration with their student information system (SIS).

Further benefits
to students and staff

OCT has further advantages when processed through TouchNet’s solutions. In addition to financial aid and student refunds, it can be used for athlete reimbursements, research stipends, and emergency loans. Card data is tokenized and protected in PCI DSS service provider level 1 systems to guard against data theft and multi-factor authentication is used to protect against fraud.

Student refunds can be a complicated process to manage. To follow regulations, disburse quickly and accurately, and keep administrative costs low is a challenge. Modern solutions using the newest payment methods, like Direct to Debit via OCT, target these issues and deliver the results that students and staff want.

With TouchNet refund solutions implemented, Idaho State students enjoy the speed and ease of signing up for and receiving refunds through Direct to Debit via OCT. Staff realize cost savings, modernize their disbursement process, and deliver a better experience to students.