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Kids' lunch money lost less often in cashless cafeteria lines

More school districts converting to cashless cafeterias nationwide

By Steve Holt

The days of sending children to school with their lunch money neatly wrapped in handkerchiefs or inside their shoe or pocket is quickly giving way to a new cashless lunch payment system.

Kids' lunch money lost less often

Cash no more: Students at Fairfield High School in Texas check out of the lunch line with biometric fingerprint scanners. Their lunch accounts are automatically debited and track their purchases.

Photo by Caitlin Neal, Eagle Publications

Following a national trend toward credit card-based cashless transactions for everything from taxicabs to bail, more school districts across the country are adopting automated school lunch payment systems. Instead of fumbling through their pockets for dollar bills or change to pay for lunch, elementary, middle and high school students are increasingly breezing through the lunch line -- some swiping or waving bar-coded student ID cards or punching PIN numbers on a keypad and others scanning their fingerprints on biometric readers.

Keeping track
"It tracks who bought what, when," says Crystal Thill, food service director for the Fairfield Independent School District, located southeast of Dallas. Almost all of the district's 1,800 students use a Web-based account system that allows parents to use credit cards or debit cards to replenish lunchroom accounts and monitor their children's meal plans.

"Parents enjoy being able to go online to check students' balances and monitor what the students are eating. It's a great way to keep track of everything," Thill says.

Lost their lunch money? A bully took it? Those familiar complaints of old are fading. Schools that have launched automated payment systems often still have traditional cash registers on hand to accept cash. School lunchroom administrators say dumping those old-style cash registers helps speed the lunchroom lines in a country where, according to data compiled by the U.S. Department of Agriculture, 5.2 billion school lunches were served every school day in 2008.

A June 2009 survey of more than 1,200 nutrition directors from school districts across the country found that 69.5 percent were currently using some form of automated lunch payments, up from 62 percent in May 2007. Another 6 percent indicated they would implement a system within 12 months, up from 4.4 percent in 2007. Also, 8.5 percent said they were considering converting to an automated payment system, according to the survey conducted by the School Nutrition Association, an Alexandria, Va.-based nonprofit group representing more than 55,000 school lunch providers nationwide.

Automated lunch payments
The survey noted the greatest change in payment methods was more school districts accepting credit cards and debit cards via the Internet. The number of respondents reporting this type of automated payment rose from 16.4 percent in 2005 to 35.8 percent in 2007 to 63.8 percent in 2009.

"As more and more business processes are conducted via the 'Net through electronic transactions, this will certainly grow," says Mitch Johns, president and CEO of Food Service Solutions Inc. (FoodServe.com), the Altoona, Pa., company that develops the software used in the Fairfield, Texas, lunchrooms. Story continues below.

 May 2007June 2009
Type of automated payment System currently in use (%) System planned in next 12 months (%) System currently in use (%) System planned in next 12 months (%)
Cash or check mailed or taken to school 91.9 67.3 86.1
53.4
Credit card or debit card via Internet 35.8 59.6 63.8
74.0
Automated payment from checking account 12.3 15.4 19.0
17.8
Credit or debit card via mail, phone or fax 7.7 11.5 8.7
6.8
Credit card or debit card at point of sale 3.4 7.7 4.7
9.6
Other payment 0.7 0 0.8
0
Source: School Nutrition Association, June 2009 survey of school district nutrition directors. The data is limited to districts that have an automated payment system currently in use or those that have plans to implement in the upcoming 12 months.

The company serves 300 school districts nationwide through its online account management system, MySchoolAccount.com. Parents sign up on a website to view their children's lunch account. Information on what students bought for lunch, how much it cost and when their balances drop below certain levels is available 24 hours a day. Parents can reload the accounts credit cards or debit cards linked to their checking accounts.

Alternatives to cash
As an alternative to sending little Johnny or Suzy to school with cash to pay for lunch, many school districts allow parents to send paper checks, but this doesn't eliminate the possibility of children losing checks en route to school. A lunchroom account manager collects the checks (although sometimes homeroom teachers are charged with gathering up lunch money and checks from students in lower grades). Paper checks may take several days to be credited to the student's lunch account.

Johns, the Food Service Solutions CEO, school districts pay $5,000 plus $1,000 per cafeteria in software fees to install his company's automated system and another $1,800 to $3,000 per cash register for hardware. Additionally, parents pay a transaction fee of between 3 percent and 6 percent to add funds to an account using a credit card, and a flat rate of $1.50 for all ACH debit transfers, regardless of the amount.

According to Galen Reigh, MySchoolAccount.com's system administrator and lead developer, each school district decides how it will allow parents to pay for lunches. "Some school districts do what we call ACH payments, and some school districts do credit card payments and some do both," Reigh says.

Another automated lunch payment provider -- New Jersey-based PayPAMS.com -- allows parents to use its website to pay for more than just meals. School activities such as community education classes, after-school care, athletic events, donations, summer school and transportation are among the student payments that can be processed online.

Four to five years from now, the majority of the parents will pay online not only for school lunch, but for all school activities.

-- Dov Abramson,
PayPAMS operations manager

"More and more parents have access to high speed Internet access and are getting familiar with online payments," says Dov Abramson, operations manager at PayPAMS (Payment Account Management System). The company contracts with school districts in 23 states, including Miami-Dade County, Fla., San Diego and Prince George's County, Md . "Four to five years from now, the majority of the parents will pay online not only for school lunch, but for all school activities."

Parents like convenience
Parents say they like the peace of mind that cashless lunch payment brings because they know exactly how their money is being spent.

"It is certainly better than giving the children money to buy lunch," says Tom Miller, who enrolled a middle schooler in the PayPAMS program in Miami-Dade County schools, the nation's fourth largest school district.

More privacy
Proponents of the payment systems point to another advantage of cashless cafeterias. How much each student pays for lunch is kept private. In districts where students from low-income families receive reduced priced or free lunches, they are scanned through checkout like all other students. Classmates in line behind them do not know these students are receiving reduced priced meals -- a potential source of embarrassment for some students and families.

Automated payments are not perfect, however. Students can still lose their ID cards or reveal their PIN to others who can fraudulently debit their accounts. The fingerprint scans help reduce the likelihood of these things happening.

Both PayPAMS and Food Service Solutions say parents are spreading the word about their services and asking school districts to set up online lunch payment accounts.

Says Reigh, the MySchoolAccount.com developer: "We're getting more and more calls from school districts that want to get in the system and as parents learn about it, they say, 'Hey, we want to do that too.'"

See related: Cashless colleges: Student IDs turn into payment systems, 3 must-ask questions for multi-use college campus cards, "Blog: Is next generation already wrapped in plastic?"

Updated: August 6, 2009


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