Cash or Credit?
- By Amy Milshtein
- October 1st, 2009
Your campus cards already do so much. They identify your students; let them into their residence halls and classrooms; and allow them to make copies, do laundry, and buy meals from the commons. Some schools have taken it one step further by inviting local retailers along for the ride. Does your card have what it takes to go off campus?
“On campus, our goal is to eliminate cash and keys,” said Lowell Adkins, executive director, National Association of Campus Card Users (NACCU). “Why not take that concept to the local retailers? It’s a win/win/win for students, merchants, and the school.”
Student Purchasing Power
One of the first schools to successfully bring its cards off campus is Ohio State University. Their BuckID card has been used off campus since the mid-nineties. “We started by expanding the card to our bookstores,” explained David Anthony, director of the BuckID program. “Then nearby merchants called us and said they wanted to be included in the program.”
As a large urban school, Ohio State had many willing local retailers nearby, but Anthony feels that the program can be equally successful in suburban settings and with smaller schools as well. “Hundreds of schools around the country are executing projects like this,” he said. Another Ohio school with a similar program has a similar story. The University of Cincinnati’s Bearcat Card gives students — and their parents — financial flexibility on campus and off.
The Bearcat Card started in a similar way as the BuckID. Offered at first as a way to do on-campus business, the administration realized the program could benefit local merchants. However, these business owners needed a bit of convincing. “We sent out letters to retailers that we thought would be a good fit with our card, but didn’t receive a lot of response at first,” recalled Ellen Robinson Wyatt, program director for the Bearcat Card. “A big part of my job is courting retailers face to face and explaining the benefits of joining.”
There are enough benefits to go around when you bring your card off campus. Students are carrying the card anyway, so they benefit from getting extra use out of the device. The school card is less risky than a credit card or even a debit card to the user and their parents because the spending limit is fixed, and it doesn’t allow for overdrafts. “If you don’t have money in your account, your purchase will be denied,” explained Anthony. “A debit card will charge for overdrafts, and those can really add up.”
Anthony isn’t exaggerating. The average price of a single BuckID purchase is two dollars. Students will typically make that two-dollar purchase five times a day: a coffee here, a bagel there. If students are overdrawn, that can quickly rack up $150 per day in fees.
Overdraft protection is just one of the ways the card can watch over a student. Some schools will not allow the card to be used to purchase such questionable items as alcohol, pornography, or tattoos. “We don’t court liquor stores or any other establishment where alcohol is the primary product,” said Wyatt. “But if students are of age, they can buy beer at a grocery store.”
Merchants benefit from the card because it makes them that much more attractive to students. “It really helps bring ‘town and gown’ together,” said Adkins. “Some schools aggressively market the program with signage, brochures, Websites, and specials like ‘merchant of the week.’”
Working With Retailers
For the most part, retailers are required to operate separate devices to read campus cards. Ohio State sells and services these readers, and the prices run from $140 to $500+, depending on the system. “Some larger national retails like Barnes & Noble can run our card through their reader,” said Anthony. “They will also accept our card online.”
Along with paying an initial fee to join or buy the card readers, retailers pay a percentage per each purchase back to the school. Fees range between “three percent and 12 percent, depending on the area of the country and local competition,” according to Wyatt. Yet this is still cheaper than credit card fees. “Credit cards charge a flat rate, usually 20 to 25 cents per purchase along with a percentage,” said Anthony. “So retailers lose money on small purchases. If a sale is under $25 it’s cheaper for them to accept a BuckID over a bank card.”
While schools directly benefit from the percentage they charge to accept their card, neither Anthony nor Wyatt would say that it generates a huge revenue stream. A school can’t partner directly with MasterCard or Visa; however, it can join forces with a banking institution and get that MasterCard or Visa logo on its card. They would make more revenue too, but the trade-off is too much for Anthony. “A credit card like that would make more money for us, but we don’t get the overdraft protection, and we can’t limit where a student spends,” he said. “It might be a great solution for a rural school without a lot of merchants nearby and students who have to shop online, but it’s not the right fit for us.”
The BuckID currently has 250 partners that accept the card and adds two to three new establishments a month. The Bearcat program is a bit smaller, but it allows the school to show off its retailers with a beginning-of-the-year event called The Taste of Uptown. Held during Welcome Week, all of the Bearcat card merchants set up booths at the event, offer samples of their wares, and hand out coupons to incoming students. “It’s a great way to introduce students to our Uptown partners,” said Wyatt.
And a great way to cement relationships.