Paying without cash

In November 2014, a survey of 10,000 parents carried out by LACA (formerly the Local Authority Caterers Association) and distributed by schools online payment provider ParentPay, revealed that 90 per cent of parents preferred making cashless payments to their children’s school.
Clint Wilson, LACA Partner and ParentPay CEO, commented: “This is the third year in a row parents stated a strong preference to make cashless payments to schools, not surprising considering the huge growth in online banking and e-commerce in recent years. Alongside convenience, parents stated it was important that they knew that their money reached the school safely and was spent in the way they intended.”
In 2004, Croydon Council became one of the first local authorities to adopt a fully cashless system. Through ParentPay, Croydon Council clearly demonstrated the time cashless systems can save and the increase in free school meal uptake it provoked; the cashless schools revolution had begun.
Encouragingly 70 per cent of 1,150 schools surveyed by ParentPay, in February 2015, have taken the first steps towards introducing an online payment system, although only 16 per cent of said that they offer a fully cashless payment system. Commonly the full benefits have not yet been realised, with schools still welcoming children to bring cash into schools, and queuing to pay the money into an online payment system.

Payment options
So why are we seeing this differential between the desire and reality? And why, in today’s technology driven society have all schools not gone completely cashless?
The answer sadly lies in the fact that there is a far-reaching misunderstanding of the payment options available to parents.
For those parents who prefer to pay in ‘cash’, systems such as PayPoint have now been introduced. PayPoint enables those who prefer to use cash to pay for their utility bills and school payments without students and the school having to receive, handle and manage this cash. This system is available in over 27,000 outlets and located within a mile of 95 per cent of the UK population.
In fact, when we look at the survey data from 334 schools which are either not aware of PayPoint, or do not offer the functionality at the school, only one per cent of these schools are fully cashless and 50 per cent stated that they would not go completely ‘cashless’ and would always accept cash.
The misconception and familiar argument against removing the option to pay with cash is that not every parent is happy or even able to use the internet to make payment; either because they received their income in cash, don’t have secure internet access or potentially because of financial difficulties. So many schools, over 50 per cent, think that they can never go cashless because they have a social demographic of cash based payers, and will therefore always have to accept cash even if they do offer online payments.
The vital fact that is missed by these schools is that those same parents can and probably already do use PayPoint to make a huge range of payments such as utility bills. Added to this, 3G/4G internet access via mobile phones is becoming increasingly accessible.

Benefits of cashless
The benefits of direct cashless payments to both parents and schools are numerous. Cash brought into schools by students can get lost or stolen, and can even encourage bullying. It also becomes very obvious which children are eligible for free school meals (FSM). Indeed, the LACA survey revealed that 4.9 per cent of those entitled to a free meal do not take up their entitlement possibly due to parents not wanting their children to face potential embarrassment and discrimination. On top of this, hundreds of hours of administration time is spent receiving, handling, recording and managing the cash. In many schools using a cashless payment system, a £15,000 per annum saving in administration time and cost has been calculated.
Trudy Taylor, school business manager at Oakfield CE Primary School, a user of SIMS Agora, said that using its cashless system: “gives our school a cost-effective way to collect parent payments and reduces the handling of cash and cheques in the school office. This is saving us a lot of time previously spent counting money and handling banking administration.”
As Anne Bull, chair of LACA and head of school facilities at Rhondda Cynon Taf Council, explains: “It reduces the chances of sweets and junk food being purchased on the way to and from school – something which parents also flagged as a concern in our research.”

Administrative efficiency
Maria Tillett, business manager at Theale Green Community School, joined the school from a background in banking. Immediately surprised by the amount of administrative time that was taken up by collecting money, Maria now has over 85 per cent of parents paying online through Parent Pay. Coupled with the administrative efficiencies and related cost savings, the school has seen a tremendous increase in those students accessing FSM, from 50 per cent to 95 per cent uptake, as they no longer feel stigmatised.

Meeting needs
By incorporating cash collection systems such as PayPoint, schools can still meet the needs of all parents, including those who prefer to pay in cash, while realising the benefits of not having children bring the money directly into school. Schools can become ‘fully cashless’ and remove the need for parents to send cash or cheques to school to pay for school dinners, clubs, trips, fees and other services.
Schools that have given parents truly cashless payment facilities have in return seen increased uptake in school meals and vastly reduced administration burdens.
Marianne Lewis, who was responsible for commissioning the cashless project for Croydon Council added: “Schools reported that administration time associated with cash income had reduced by up to 80 per cent in some cases, enabling them to redeploy financial and administrative resource to more important tasks in their schools.”
Monica Morley, school business manager, and Sara Smithdale, senior finance officer at St. John Payne Catholic School in Essex, explain why the school went fully cashless: “Back in 2008, the time required for collecting, reconciling and banking cash and cheques was almost becoming unmanageable; we had to do something to tackle this issue.”

Other considerations
So if a payment system with PayPoint functionality incorporated removes any of the potential barriers to adoption, are there any other considerations? The only other issue is the cost. Payment systems have to be purchased and PayPoint does carry a small transactional charge. However, with the significant financial benefits realised due to the reduction in administration time, the argument against going completely cashless starts to disappear.
There are, however, considerations that schools can make the when investing in a payment system. We recommend making a business case – it can be a good idea to carry out a simple cost analysis based on the time it takes administrators to collect payments and manage the cash. Suppliers should be able to provide case studies and referrals that may support your arguments.
Decide on your final objective and build a strategy for achieving this. Ask the supplier to provide evidence of what is realistically achievable and check this by contacting schools already using the system. Additionally, build a quote comparison between suppliers, but remember you need to encompass the total cost of ownership; including any annual costs, training and support. What’s more, consider if the solution offers socially inclusive payment options.

Next steps
Ensure your chosen system offers a secure Payment Collection Service to avoid the dangers of collecting money from parents’ debit/credit cards. However, if you do chose to go this route, find out if you will need to pay transactions costs for ‘every’ single item / related payment that is purchased by parents on your system.
Furthermore, ensure your system allows you to record and report on Universal Infant Free School Meals (UiFSM), Free School Meals (FSM) and paid for meals. A good system will offer a broad reporting functionality including income reconciliation, electronic payment receipts, audit trails and banking reports.
Providing balance alerts to parents can help reduce the need to chase parental debt and we recommend checking the financial stability of your preferred supplier and that they and their products meet Data Protection and PCI Data Security Standards and regulations.

Further information