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Where should e-learning providers look for new market opportunities – and what role do payments play when it comes to online growth?

Online learning has been gaining traction steadily over the past decade, but the Covid-19 pandemic brought its expansion to a new level.


As lockdowns and other mitigation measures forced people to stay at home, online courses exploded in popularity. Many schools and universities have integrated online learning as a more permanent feature of their offering. E-learning providers, meanwhile, experienced huge bursts of traffic during the pandemic.


With in-person classes having long since resumed, the experience of learning online has bolstered confidence in this form of education as a reliable teaching medium and alternative for traditional in-person courses.


The e-learning market reached $315 billion in 2021 and is projected to grow at an impressive 20% CAGR between 2022 and 2028. But to build a competitive advantage and grow sustainably, e-learning providers must ensure that their offering is well-positioned to appeal to customers in new local markets.


What is the state of the e-learning sector? And what role do digital payments play when it comes to localization and attracting new customers? 


Keep reading to find out more.



Table of contents

The global market for EdTech and e-learning

Challenges facing e-learning 

Growth of e-learning in key regions of the world during 2020

E-learning and online payments: Why the right payment technology matters

Summary: Optimize payments to stay ahead in EdTech

Global business guide EdTech e-learning PayU cover image

The global market for EdTech and e-learning

Due to the pandemic, 2020 was the year when e-learning (also called distance learning) went mainstream. The percentage of students in the United States taking exclusively distance learning courses grew from 17.5% in 2019 to 45.5% in 2020. Courses including some distance elements were chosen by an additional 19.4% of students in 2019 – in 2020, they attracted 28.5%. 


Which factors did students take into account when choosing the school for an online program? 


According to data from Statista, the top reasons were:

  • Affordability 
  • Tuition and fees
  • School or program accreditation
  • Program concentrations and specializations within the degree

Challenges facing e-learning

Accessibility and digital literacy

Digital education demands technical equipment from learners – from personal computers and adequate software licenses to reliable electricity and high-bandwidth internet connection. In most developed nations, such conditions are available through libraries or other public infrastructure if students cannot personally afford them. But in many emerging markets, the quality of digital infrastructure is less widely accessible.


A challenge related to accessibility is digital literacy. To learn effectively using an online system proficiently, it helps to have some experience using different software platforms as well as troubleshooting potential technical issues that may crop up in e-learning. 


Yet with digital transformation in many markets still driven largely by smartphones, improving access to laptops and desktop computers is essential – both to facilitate the best learning experience, and also to improve digital literacy and proficiency with a wider range of devices.



Greater competition

The number of edtech startups has skyrocketed over the past couple of years and the rise of digital education is likely to continue at the same rate. Crunchbase lists almost 7 thousand companies in its EdTech Hub along with 150 startups founded in 2021. 


The overcrowded e-learning market is reflected in the high competition for funding, which inspires startups to cut development costs or compromise on margins with competitors. At the same time, in order to gain a competitive edge, many companies are also investing in the quality of the experience – adopting strategies to make their content more engaging and implement digital solutions for teaching.



Prioritizing digital over education

The job of digital education is still to stimulate talent, challenge students, and explain new concepts. E-learning technology is important, but education experience is a great asset in any transformation program. The expertise of the instructor as well as the quality of the content provided can easily make or break any online learning portal. In order to provide a great product and retain customers, e-learning providers must always remain focused on the learning experience itself.

Growth of e-learning in key regions of the world during 2020

The pandemic led to a boom in e-learning globally – which has, in many cases, proved to be sustainable as e-learning platforms and apps continue to provide value even with in-person activities largely resuming.


As EdTech platforms and other e-learning businesses look at opportunities for expansion in the future, it’s worth looking back at some of the key regions of the world where online learning got the biggest boost from Covid-19.



A boom in online education spending in Latin America 

The total online education spend grew by 69% across PayU’s seven Latin American markets between 2019 and 2020, according to PayU data. The leaders were Mexico and Argentina, which grew by 139% and 138%, respectively. PayU processed $350 million worth of education-related transactions in Colombia in 2020, a 73% increase over 2019.



Digital learning expands in Eastern Europe

Eastern Europe represents around a quarter of Europe’s total population. And while the e-learning market in the region makes up just over 10% of the total European market for online education, growth rates are high as European EdTech migrates further east.


Consumers in Romania were estimated to spend $1.8 billion in 2020 on education, vaulting the country into the top 15 EU countries for consumer spending on education. The country’s e-learning landscape is set for a breakthrough as an increasing volume of education activities take place online.


Eastern European digital powerhouse Poland also registered increases in online education spending in 2020, especially in Q2, which saw 124% growth compared with Q2 2019.

Quarterly change in online education spend on the PayU platform in Poland, 2019-2020

EMEA catches up with large increases in transaction value for online education

According to PayU data, large jumps in average transaction value were a key characteristic of the overall trends in online education spending across EMEA in 2020.


For example, in Turkey, consumers spent 28% more on education using PayU and Iyzico’s platform in 2020 compared to the year before. The country’s providers saw a $100 increase in the average educational transaction value.


Looking toward the African continent, South Africa has become one of the standout markets globally in online education. In 2020, it registered a 67% increase in spending compared with the previous year as the average transaction value on the PayU platform grew from $136 in 2019 to $404 in 2020.

Increase in transaction value within education vertical on PayU platform in South Africa, 2019-2020

E-learning and online payments: Why the right payment technology matters

Optimizing payment routing and the customer checkout experience are critical for any company doing business online. The same is true for EdTech and e-learning.


E-learning businesses must ensure that – at a minimum – their platform offers simple and easy online checkout capabilities, in order to minimize friction during the payment journey.


At the same time, to reach more customers and expand to new markets, EdTech businesses should focus on offering more online payment methods to further maximize conversions and meet a wide variety of consumer preferences.


Online courses and learning subscriptions are typically a higher value product, meaning that customers are even more focused on using their payment method of choice for billing. That means that merchants should put at least as much thought into the payment methods they have on offer as they would into pricing and other product-related decisions.


When it comes to expanding in emerging markets, local and alternative payment methods are especially important for adapting the product offering and winning consumer trust. With that said, alternative payments are also becoming increasingly prominent in developed countries, as more customers turn to e-wallets and BNPL grows in market share.


Here are some tips for EdTech and e-learning providers when it comes to building the right payment infrastructure for scaling and market growth:




1. Automate the payment process

A smooth payment process is critical for customer satisfaction. Ideally, payments for e-learning content should be facilitated with minimal additional effort from students.


Recurring payments allow digital education providers to automatically charge learners at specific times, save payment data for the future, and enable users to pay with a single click.


To learn more about PayU’s subscription payment offer, get in touch with our team.



2. Offer more payment methods to meet customers halfway

As with any e-commerce business, e-learning providers need to optimize every area of customer experience – including the checkout process. 


By providing multiple global and local payment options, e-learning platforms can improve their conversion rates across domestic and international markets. More payment methods help to increase appeal to a broader audience by ensuring a seamless shopping experience for everyone. 



3. Focus on mobile e-commerce

Unsurprisingly, e-learning is particularly popular amongst Millennials and Gen Z. At the same time, these two generations convert via mobile more than other generations.


That’s why optimizing for mobile e-commerce is essential for providers looking to engage these customer segments. With many referrals for online courses coming via LinkedIn, Instagram, and other social media, mobile is particularly important when it comes to customer acquisition.


To boost mobile conversion rates, e-learning businesses should focus on providing a well-optimized payment page design and user-friendly checkout experience regardless of the channel. Being able to offer payment via digital wallets and other mobile-first payment options also adds a layer of convenience that can help to reduce cart abandonments on mobile and drive increased revenue. 



4. Develop a local acquiring approach

From the consumer perspective, the payment process ends after the customer inputs their payment details and clicks to pay. But from the perspective of receiving payments, getting a customer through the checkout funnel is just the beginning. 


Understanding the complexities of global payments is particularly key in online learning because students, teachers, and e-learning providers may be located in different countries or regions. There are any number of places where a payment can go wrong while it’s being routed through the maze of issuing and acquiring banks, payment processing networks, and payment methods that are required to successfully complete an online payment.


It’s little wonder that while approval rates for brick-and-mortar transactions average over 97%, just 85% of e-commerce transactions are approved at the back end. For a market segment like e-learning that relies completely on online conversions, optimizing payment approval rates can mean the difference between tens or even hundreds of thousands of dollars in potential revenue.


Working with a global payment provider allows merchants to get more payments approved by facilitating transactions via local or regional payment processing networks in the places where a payment is being made. If a transaction doesn’t move along the path to completion smoothly, the global payment platform can forward it through additional processing channels until its successful completion (more on this below).

Payment approval rates for e-commerce key facts

5. Collect and analyze payment data 

Payment data can be challenging to access, analyze and use for decision-making, especially when it is spread across multiple platforms and providers. One of the advantages of implementing a global payment solution is the capability to see a full overview of global payment transactions – giving merchants an understanding of where they can find additional revenue by optimizing inefficient payment processing or low approval rates.


PayU’s advanced payment analytics module allows education providers to track payment approval rates by card country, currency, payment method, and issuing bank.


These insights can then be used to mitigate low approval rates or unnecessary payment processing fees by leveraging the other tools available in PayU’s global payment platform.



6. Take payment security seriously 

Payment fraud is a persistent challenge for any e-commerce business. As more business takes place online, cybercriminals have more opportunities than ever before. The rate of successful online fraud attempts went up for all retailers in 2020, underscoring the scope of the challenge.


As businesses dedicated to the virtual space, EdTech and e-learning providers must make every effort to ensure their customers feel safe and are safe when it comes to entering their payment details – particularly for recurring or subscription payments. 


E-learning platforms can ensure a high-level of payment security by working with a payment provider that incorporates tokenization, 3DS tools, and other high-level security features as part of the payment offering. This can also help reduce the regulatory burden for businesses responsible for safeguarding large volumes of customer payment data.


At the same time, many global payment providers (such as PayU) offer anti-fraud tools that are designed to block potentially fraudulent transactions through rules-based and statistical models that identify patterns indicating criminal activity. 



7. Optimize transactions with smart routing  

One of the most important tools for optimizing approval rates is “smart” or AI-based routing, which can change the routing configuration for transactions based on rules set by the merchant. A routing engine with AI-based functionality learns which routing configurations are best-positioned to optimize approval rates, ensure lower transaction fees, or conform to other desired routing criteria.


This ensures that transactions go through the optimal payment processing flow in order to help merchants get more payments approved at a lower cost.


Smart routing can help businesses to process more local payments by incorporating additional payment providers. One of the leaders in the online financial education sector in Mexico transformed its traditional business model and achieved a 100% month-by-month growth in sales in Peru and Chile by onboarding a regional payment platform that smoothly added alternative local payment methods. 


Another benefit of some smart routing technologies is the capability to “save” failed transactions via the so-called Instant Retry functionality. With PayU’s Instant Retry Feature, rather than returning a payment decline to the customer when a payment is not accepted by one of the links in the payment processing network, PayU’s patented routing engine retries the transaction through additional routing configurations, leading to more successful transactions, higher payment approvals, and happier customers.

Graphic showing Instant Retry Feature as part of PayU Hub offering

Summary: Optimize the payment experience to stay ahead in e-learning

Easy payments have a direct impact on customer satisfaction, which is critical in an EdTech world marked by increasingly high competition.


In 2022, the e-learning sector will reach $146.90 billion in revenue. At the same time, the role of technology in education will only continue to grow together with the rise of the digital-savvy population.


To take advantage of a growing marketplace and expand into new markets and business segments, e-learning businesses must ensure they are well-prepared to appeal to a wide range of customer segments. The right mix of online payment methods plays an important role when it comes to reaching new customers – particularly in new geographies.


At the same time, as companies doing business entirely online, EdTech and e-learning providers need to implement systems to prevent fraud and keep payment data secure. 


Finally, just as approval rates and sound payment routing should be a priority for any e-commerce business, e-learning providers must also focus on optimizing revenue and conversions by making sure that online payments are being processed as efficiently as possible, with the highest possible approval rates and the lowest possible fees.