Custom-designed prepaid programmes for schools are being rolled out in the UK and across Europe. Not only do these represent a convenient way for parents to pay for school meals, they also prevent pupils who receive state aid from being stigmatised in the classroom. Louise Naughton reports.


Pie chart showing the cost of installing cashless catering systemsSchools offer attractive opportunities to the prepaid industry. The benefits of taking cash out of schools are various, particularly when it comes to paying for school meals. In the UK, school meals for children whose parents are on state benefits are provided by the state. The service is invaluable in the fight against social disadvantage and child poverty, but threatens to be undermined by the social stigma attached to the scheme.

According to the Child Poverty Action Group (CPAG), 20% of children eligible for school meals across the UK do not collect their vouchers. The National Assembly for Wales’ cross-party Children and Young People Committee has found a far greater number of children (68%) would rather go hungry than potentially face humiliation from peers.

The committee chair Helen Mary Jones has delivered a call to action to the Welsh government insisting much more needs to be done to implement a stigma-free school meal system in the country. She urges them to investigate and consider the option of a cashless system, whereby every pupil uses the same payment method.

Welsh Assembly member Joyce Watson concurs with Jones, and has backed the use of a fingerprint ID system of cashless payments in schools.

"I really think this archaic practice of identifying children [who qualify for free school meals] has to stop," says Watson.

The problem has got so bad that councillors implementing the largest budget cuts in London are looking to spend more than £8m ($13m) on free school meals by 2012 to stop poorer children feeling stigmatised.


Seeking more sophisticated solutions

Pie chart showing whether schools operate a cashless system for catering servicesThe traditional free school meals system is patently not working as those who qualify for the service are being identified in an all-too-public manner. The system is crying out to be more sophisticated and, what’s more, the technology is there to do it.

In gathering research into cheque usage, the UK Payments Council found people aged 30-45 principally write cheques for school activities, namely school lunches, after-school clubs, music lessons, trips etc. Removing this reliance on cheques in this area would certainly help its case to remove the costly payment method altogether.

Nick Peplow, marketing director for payment solutions provider allpay, says it is one thing to make the catering service cashless but it is quite another to get rid of the use of cash and cheques across all operations in schools – the intention of its solution ‘allpay Dosh’.

allpay is currently piloting its cashless solution with a school in Shropshire with the intention of rolling the solution out nationwide in the near future. The solution, which was developed in nine months and been out in the market since the second half of 2010, aims to cut the administrative burden and costs associated with collecting and banking paper-based instruments.

This kind of cashless system allows parents to pay into the schools remotely – either via the internet or over the phone – by credit or debit cards to either pay specific bills or top-up a virtual account to fund their child’s purchases in the school. This gives parents control over the available funds the child has access to, and the ability to monitor what the funds are spent on and where.

allpay uses card-based and biometric payment methods by way of taking payments for school meals. In both instances, children that qualify for free school meals would carry out the same payment procedure as those directly paying for their food, by either swiping a card or placing their fingerprint on a reader.


Data concerns

Concerns have been raised over the intrusive nature of fingerprint biometrics, with parents fearing the inherently personal data their child’s identity could be stolen or misused. But it doesn’t take long to dispel such myths as Peplow has found a little piece of consumer education goes a long way.

"We do not capture a real fingerprint and as such do not store real fingerprint data," says Peplow.

"We store digital numbers that are created from the fingerprint pattern of the child. You couldn’t possibly recreate a fingerprint if that data fell into the wrong hands, which allays a lot of fears."

While the company feels compelled to give parents the choice of both payment methods, it is the biometric way of paying that is taking off. Card-based solutions in this environment are seen as out-dated and in replacing one payment instrument – cash – with another equally problematic payment method, schools will simply inherit another set of problems.

"We had cards in the very beginning, which we found to be a nightmare," says Sandra Weigel, service manager for Carmarthenshire Catering Service – a company that adopted cashless solutions five years ago.

"It was costing us to replace the cards all the time so we had to start charging the children for the lost cards. They ended up coming to the till with cash instead of the card and paying for the lost card rather than their school meal."

As well as the costs associated with replacement cards, a card-based solution does not eradicate the potential for bullying and children becoming targets based on the balance on their cards.


Fighting fraud

Another benefit for a school’s catering service moving to a cashless system is the element of control in combating fraud. Weigel has found cash levels have increased since implementing a biometric payment solution, thanks to an increase in money that is intended for school use being spent within the school and a much smaller risk of employee theft.

"Financially it is better for us, and the financial control of having less cash available to people at the till is better," says Weigel.

"We have found our takings have improved since we moved to a cashless system."

The UK Payments Council’s 2018 cheque phasing deadline, which has recently been cancelled thanks to the lack of alternative payment mechanisms, served as a driver for schools and other organisations to invest in cashless payment technology, as allpay has found.

"We are talking to councils across the UK about creating an e-payments benefit system," says Peplow. "This decision is not just based on efficiency but the real fact that this payment method will shortly disappear. It is not that they aren’t aware cheques are old fashioned and inefficient but the deadline speeds up the process for change."

Thankfully for e-payment providers, the now redundant cheque phasing deadline is not the only driver for organisations such as schools to migrate away from cash. Creating a more efficient payment process, which in turn delivers budget cuts and hard cash savings, is the main push to change. Councils are now turning over every stone, looking for ways in which to save money. And with them being as budget constrained as they are, it is more important than ever that schools are as efficient and cost effective as possible.

A disincentive for schools to move to a biometric system could be the costs involved. The Welsh Assembly estimates this could be around £30,000 for the initial installation and £2,000 a year for maintenance. A world apart from what allpay claims to charge.

Peplow acknowledges the start-up costs involved in moving to a cashless system; he claims this will amount to no more than "a couple of hundred pounds" for a basic permanent set-up and is quickly offset with the bankable savings from getting rid of handling and banking cash.


Average saving of 40%

allpay calculates it can take the average primary school around 12 hours a week to manage cash collection processes, equivalent to annual running costs in excess of £4,300. For secondary schools, this increases to around 22 hours a week, costing as much as £8,300 a year. allpay Dosh claims to save the average school up to 40% on running costs – bringing costs down to £2,500 for primary schools and £5,000 for secondary schools.

If schools were to invest in more than a "basic solution", allpay Dosh installation costs, which include the hardware and training, would be around £2,000, and it is claimed a school would recoup its initial investment in just over a year. This is a bit of a jump from Peplow’s quote of "a couple of hundred pounds" but is still far less than the Welsh Assembly estimates of £30,000.

Stephen Jones, head teacher of Ysgol Glan-y-Mor secondary school in Carmarthenshire, Wales, says the costs are worth it as the solution has been successful in cutting queuing times and removing the stigma attached to free school meals.

The migration of schools to cashless systems is not just a UK trend. Poland’s Bank Zachodni WBK has pioneered the solution in the country, launching its school card programme six months ago. It is currently present in 16 schools across Poland and aims to have more than 14,000 cards in issuance during next school year.

Michal Kuczmierowski, business development manager at BZWBK, told EPI the bank chose to focus on the element of education when launching its school card programme. It teaches children how to manage and control their spending, while also getting them comfortable using electronic money – something that will become useful to the bank once the child reaches an age where they qualify for credit or debit cards. The programme also gives the bank the opportunity to dispel myths surrounding electronic money.

"People believe electronic money is not as safe as cash and this simply isn’t true," says Kuczmierowski.

"E-money is viewed upon as being ‘too easy’ to spend but we show people how they can control and manage their account in a better way than by using cash."

It makes sense for schools to move to a cashless system as the benefits are clear for all to see, yet payment cards are not the solution here. In substituting cash for cards, schools are still left with the cost of reissuing lost cards and the fact children can still fall victim to bullies.

The looming 2018 cheque phasing deadline served to encourage schools to start thinking about cashless systems sooner rather than later. Only time will tell if the cancellation of the deadline will impact the speed in which schools choose to migrate.

Bar chart showing what the main reasons were for schools considering cashless systems