The Future of Cafeteria Prepayment
By: Karin Newberry
Wouldn’t it be great if you could enable parents to prepay for their children’s school meals—and any other fees—via credit card? Wouldn’t it be even better if you could enable them to pay online via credit card? In the age of widgets and mobile apps, 3G and WiFi, e-commerce goes even further now, extending beyond the desktop computer. In the near future of cafeteria prepayment, not only will parents easily check their children’s lunchroom account balances via their iPhone, for example, they will also enter payments toward their children’s accounts while on the go.
Today, many parents wonder why their school does not have this sort of convenience enabled. Typically, a school that is still accepting only cash or check fears that it will cost too much, both in time and money, to set up online credit card payments. Interestingly, many of these schools have already invested in a cafeteria point-of-sale system, which offers integration with an online payment system. Either the schools are unaware of this important option, or they are assuming the costs of accepting online payments will be too high. Revenues, however, increase when parents are given the option of paying by credit card.
The first of these cafeteria prepayment Web sites appeared in 1999. At that time, they dealt solely with direct withdrawals from parents’ bank accounts. However, parents quickly demanded the ability to pay by credit card. Furthermore, parents wanted options, such as monthly payments or automatic payments based on a low account balance. These options led to guaranteed revenue, as increased payment options equated to greater convenience, which translated into more prepaid accounts. They also curbed problems with insufficient funds in checking accounts. In fact, some schools no longer accepted checks after implementing online credit card payments, as the most comprehensive prepayment Web sites allow parents to pay not only toward school lunches, but also toward any type of school fee.
So, where do you start? Contact your cafeteria point-of-sale provider to ask if they work with a prepayment Web site. Your best option is a point-of-sale provider that has fully integrated with a prepayment Web site. This means that not only can parents view up-to-date account balance information for their children, but they can also view the day-to-day purchases. You’ll find that parents greatly appreciate the ability to track their children’s spending.
This technology has even expanded to include meal selection. In some schools, parents now have the option of selecting all of their children’s meals online and then paying toward only those meals, rather than or in addition to applying funds to a general account.
Many schools find the increase in prepaid accounts to be of such a benefit that it offsets the costs associated with this type of service. Others elect to pass on the costs to parents in the form of a “convenience” fee. While there was a time when prepayment Web sites could act as the “merchant” and accept payments on behalf of schools, simply depositing the funds into the school’s bank account each month, Visa regulations now require schools to have their own merchant account when accepting credit card payments—with no exceptions. However, depending on the prepayment Web site that you select to use, the process of setting up your merchant account can be handled for you and the account guaranteed by the Web site company. In all likelihood, the Web site company will be able to secure a much better rate for your merchant account than your school would on its own. It’s important to note that any Web site company that does not require you to have your own merchant account is operating outside of Visa regulations and will be shut down with little or no notice once Visa is aware of their activities.
Once a cause for concern, having your own merchant account is actually to your advantage. With your own account, online payments flow directly into your bank account within 48 hours of the payment; you no longer have to wait until the end of the month for the prepayment Web site to deposit the monthly revenue into your bank account.
It’s important to select a prepayment Web site company that will send you accounting reports, essentially handling most of the accounting for you. They should also be able to break down the associated credit card fees and suggest a flat-rate fee to attach to payments if you choose to pass the costs along to the parent. For example, one might allow parents to make payments within a range of $20 to $100 with a flat fee of $2.50. Your prepayment Web site should be flexible in allowing you to select a payment range. They should also allow the school to either charge parents a fee or absorb the costs. Of course, eliminating this convenience fee, and instead absorbing the costs, equates to a greater increase in prepaid accounts.
While the school is the official “merchant,” it bears none of the responsibility as far as securely maintaining the credit card information. This responsibility lies with the prepayment Web site and is a major advantage of setting up payments through another party.
Today’s economic reality dictates that parents want the option of paying by credit card. Ideally, they want to pay online, rather than in person. And, more and more, they’re asking for this option to be “mobile.” Schools can now accommodate these demands and see their revenues increase. Gone are the days of bounced checks or lost lunch money…or students spending their lunch money at fast food restaurants. Parents can now monitor their children’s food choices and ensure that the funds are, in fact, used for purchasing school meals.
Karin Newberry is marketing specialist for Café Prepay/Barr Security, www.cafeprepay.com.
