Digital wallet technology has become very popular with consumers who have warmed to the idea of being able to complete purchases easily and quickly via a software-based system that securely stores payment information and passwords for numerous payment methods and websites. Also very appealing is the fact it can be used in conjunction with mobile payment systems, which allow customers to pay for purchases with their smartphones from virtually anywhere.
As the consumer digital wallet platform matures, we are seeing that it has legs in b2b environments, including retail, e-commerce, international business and subscription services to name a few. There is another segment starting to take advantage of digital wallet that may surprise you – education.
Teachers, for instance, regularly receive funds or budgets before each school year to purchase items they need for their classrooms. These items include pencils, paper, markers and staplers and are often paid for out of pocket by teachers who are later reimbursed. Anyone who has ever spoken to a teacher about this knows the traditional reimbursement process is slow, laborious and exceedingly inefficient. Digital wallets offer an attractive option for these school-related transactions with many benefits.
Digital wallet tech offers benefits to teachers and administrators alike
The Utah State Board of Education estimated that the traditional process for reimbursing teachers costs up to $750,000 in staff time annually. In the El Dorado, Arkansas school district, the finance team spent more than 650 hours of labor and an addition $16,345 in expenses in processing some 1,500+ transactions during the 2018-19 school year – all for transactions of $15 or less. And in the Toledo Public School District, the fourth largest urban school district in Ohio, digital wallet technology freed up 20-30% of its accounts payable staff time and reduced the number of purchase requisitions it handled from 2,650+ to just 53.
The back offices of school districts now have the opportunity to employ technological innovation with digital wallets to create time and money-saving efficiencies to the process of accounting for funds distributed to and earmarked for teachers and school employees. Today, most schools still endure the cumbersome accounting process that has been in place for the last 100 years – paper expense reports, submission of hard copy receipts and the routing of the reimbursement paperwork from desk to desk to desk for validation and payment authorization. Most would agree it is indeed time for a change.
Digital wallets enable teachers to access their accounts via their mobile devices, so they can track their budget, reference approved vendors and make purchases on-the-fly. Perhaps most appealing of all to teachers is that all purchases are automated and they do not need to collect receipts. As a result, teachers are empowered to be the CEOs of their classrooms and unencumbered when they make purchases of items they need on a day-to-day basis to do their jobs. They are also able to spend less time doing paperwork and more time focusing on the needs of their students—which creates a significant morale boost for teaching staffs.
On the administration side, there is great concern around making sure all allocated funds and budgets are spent appropriately. Digital wallets can be configured to securely store users’ spending allowance and permissions for numerous payment methods and merchants, reduces the risk of fraudulent use. In fact, they can capture SKU level purchasing data for every transaction and automate the reconciliation and payment based upon rules established by the school district. This is a big check box for school administrators.
By automating the allocation, receipt collection, reconciliation and payment processes, digital wallets save school systems a significant amount of money in staff time. We’ve heard reports that the labor cost of processing a single reimbursement invoice can be as high as $150. While this may not raise an issue when hundreds of desks are being ordered, it makes little sense when you’re talking about classroom and art supplies that may only amount to a fraction of that amount.
Lastly, and perhaps most importantly to administrators, the automating of these financial processes is extremely beneficial in preparing for the annual school audit.
School systems are under many pressures, from the importance placed on improving students’ test scores to those imposed by the current health crisis. Digital wallet technology is a win-win proposition for both teachers and administrators that relieve many of the accounting headaches that those in the education sector have long considered unavoidable and simply “the way it is.” Digital wallets offer a better way.