Are you using the best payment method for your school?

Nataliia Semenenko - 11 April, 2019

Category : Blog

Are you using the best payment method for your school?

People buy and sell every day, and schools are no exception. As a product manager developing payment systems, the main ‘use cases’ I consider when thinking about school payments include school meals, paid clubs, and field trips. There are a lot of other use cases depending on what kind of additional services the school provides,

People buy and sell every day, and schools are no exception. As a product manager developing payment systems, the main ‘use cases’ I consider when thinking about school payments include school meals, paid clubs, and field trips. There are a lot of other use cases depending on what kind of additional services the school provides, such as selling snacks, school uniform, items in the school shop, books, tickets for school events, and more.

The most popular ways to process payments from parents and guardians are:

  • Cash
  • Cheque
  • Bank transfer
  • Credit or debit card

Let’s discuss the pros and cons of each of these methods!

Cash payments

On the school’s side, cash has the major benefit of no processing or transaction fees. Parents at many schools may also prefer to use cash to pay for activities and meals – this is generally a question of demographics, as lower income families are less likely to use cheques or have credit/debit cards as their main form of payment. 

Cash does have it’s downsides though, from the stress of counting bags of coins and banknotes, to the security required to safely store them in school and take them to a bank at least several times per week (hello, staff time and safety).

Cheque payments

Cheques are another way of accepting payments that mostly have similar pros and cons to cash. The specific downsides of cheques, however, are that there is a longer lag time between the parent making the payment and the school being able to cash it. This can cause problems with, for instance, having the money you need for a trip in time for every child to go, or even with cheques bouncing altogether.

It’s probably fair to say that in a lot of places this way of accepting payments is slowly dying out because of its inefficiency, and the long time needed to process money. A lot of people these days simply don’t use cheques, or even own a chequebook.

Bank transfers

This payment method doesn’t involve dealing with banknotes and papers, everything is in one place on the screen, and the accounting is so much easier. However, this payment method is not as popular at schools because it tends to be very time-inefficient when it comes to making frequent, smaller payments of different sizes – like you do with school meals. The time that it costs to make a bank transfer is worth more than the £2.40 you’re actually sending.

Card payments

Research shows that most people prefer using card payments when they can. From the parents’ point of view, card payments provide several incentives to pay reliably and on time: its fast and easy, refunds are simple, and they can track their payments in their account or on their phone.

Schools must always consider the fee that comes with each payment and understand whether this is feasible for them to use (remember, that lots of providers don’t use a flat fee and usually charge some percentage plus a couple of pence, which become super expensive for micro-payments that are most common in schools). However, sometimes it’s better to lose a small percentage on a transaction fee, rather than losing 100% of a payment when a parent says that they don’t have enough cash with them!

All these considerations are why we take a holistic approach to school payments, and have given our MIS the ability to log cash, cheque, bank transfer, and online card payments. Arbor provides a sophisticated solution for managing school payments via the MIS and our Parent Portal. Together with taking payments for school meals, trips and clubs, it gives flexible possibilities for setting up and accepting payments for bespoke accounts, such as for books or uniforms. You can also use Arbor to audit and report on all these transactions and accounts.

So, what’s the best method for your school?

This is up to you, but on balance out of all four options, it’s no secret that going cashless is the current trend in today’s world. The United Kingdom had the highest revenue rate in cashless payments among all EU countries in 2017 – more than 100 trillion pounds. More and more schools are joining this trend and deciding to go cashless (or mostly cashless), for simple reasons:

  • It is not particularly safe for kids to bring money to school
  • It is also not very safe to keep money in school
  • It involves either school staff time spent to take money to the bank, or spending money on services that would bank money for you
  • Going cashless eases accounting workloads

A card payments system like Arbor will help you go cashless in a format designed for schools and integrated with all your other MIS modules.

Image 1: A screenshot of the Arbor App 

The benefits of card payments in Arbor:

  • A flat transaction fee of 1.275% (cheaper than most providers). Schools that often process micropayments (for instance for school meals) don’t have to worry about a high add-on price, since Arbor takes only a flat fee with no hidden costs or additional service charges per payment.
  • Everything is in one place – in Arbor – so there is no need for schools to maintain different systems to run the MIS and accept card payments. It’s easier and time efficient for school staff. And it’s great and easy for parents as well – they log in once to their Parent Portal in which they can not only see their kids results and information, but pay for their meals, clubs, trips etc.
  • Arbor supports paying out money to different bank accounts (for instance, when there is a need to pay out collected money to a caterer to a different bank account). You can also find the detailed breakdown of each payout per transaction basis.
  • All reports, VAT invoices etc. are accessible in Arbor MIS, saving time otherwise used on maintaining and using more than one system.

We are at the beginning of a fascinating journey for different ways of accepting payments, and the future may bring even more developments, from mobile and biometric payments, to things like cryptocurrencies. If your school trip funds are still tied up in a lockbox in reception though, a decent card payments system may just be the best place to start.

If you’re an Arbor customer, you can talk to your Account Manager about getting started on Arbor Payments and Parent Portal in your MIS. If you’re not yet an Arbor school, and would like to find out more, get in touch via our contact form or on 0207 043 0470.