Cashless and Online Payment Systems are Taking Off in the Education Foodservice Segments

January 1, 2002

REAL FOOD, VIRTUAL PAYMENT. Online funding of lunch accounts is fast gaining acceptance in schools and colleges.

Sodexho School Services recently joined a number of providers that give parents of primary and secondary school students the option of funding their kids’ lunch accounts through the internet using a simple credit card payment option.

Most other providers of such services are outside firms that specialize in electronic funds management but don’t get involved with the actual foodservice operations. School Services, a division of Sodexho, Inc., will provide the service along with its cafeteria management offerings to schools.

Online declining balance accounts are beginning to supplant traditional declining balance “smart” cards because they don’t have to be physically “loaded” at a dedicated machine, adding convenience for the user and subtracting upfront hardware costs for the provider.

The option is currently most prevalent in the K-12 and higher education segments, where its advantages to the parents doing the funding include convenience, oversight and the ability to ensure that the money is used for the purpose intended (i.e., buying meals).

In the corporate world, where implementation of such systems is only beginning, acceptance is expected to be spurred by integrating the declining balance card with other functions such as an ID badge or security access verification.

This kind of “mega-card” is already gaining wide acceptance on college campuses, where it allows a student to pay for a meal, make photocopies, withdraw books from the library, open the door to a dorm, get a drink or snack from a vending machine and provide proof of identity all with one card.

The Sodexho package, called SodexhoEducation.com, gives parents a funding option but allows them to see school menu schedules, nutritional analyses, school news, special events information, employment opportunities, catering information and newsletters and communicate with the contractor with questions and feedback.

It is being installed in more than 300 school districts, with the online payment option to be rolled out in a few select districts initially. The first site— Niles Township High School in Skokie, IL—logged more than 46,000 hits during its pilot run.

Other purveyors of online account software and services include FreedomPay, which is working with Compass Group along with a number of commercial restaurant chains on an integrated cashless payment platform Blackboard, a leading e-education infrastructure company whose primary business is providing online coursework options for colleges; and Comalex, Inc., a manufacturer of onsite cafeteria automation software.

These firms either market software that institutions can use to set up online accounts, or they administer the accounts and charge a per-transaction fee. For example, Comalex adds a 6% surcharge to each online transaction to pay its overhead costs but the service is currently a breakeven proposition for the company, whose primary business is selling software.

So not everything dot-com seems to be spiraling down.