Blackboard Inc. and PE Systems LLC are partnering to help colleges and universities reduce their payment card acceptance costs.
Blackboard, a Washington, D.C., education software company, will refer its Blackboard Transact users to PE Systems, a Spokane, Wash., payments processing consultancy, under the agreement announced Nov. 15.
PE Systems also will refer schools to Blackboard that need to "add, augment or replace current gateway and payment ecosystems within current campuswide systems," Robert Skattum, PE Systems' chief operating officer, said in an interview.
Blackboard Transact is a program Blackboard rolled out in March that colleges and universities can use to link their closed-loop campus identification cards to payments and building access.
PE Systems uses an automated process to analyze fees associated with payment card acceptance, especially interchange, which represents the main portion of costs for schools accepting card payments, Joe Bizzarro, the chief executive of PE Systems, said in an interview.
Acquirers pay interchange to card issuers and pass the expense along to their merchant customers as part of the discount rate, which also includes other costs associated with card acceptance, such as processing and other fees.
PE Systems works with the schools "to identify, evaluate and propose cost-reduction opportunities," using historical payment processing data and details from their processing statements, Skattum said. It then produces recommendations on ways to reduce card acceptance costs, he said.
Cost-saving opportunities may include better interchange management, corrections to the school's industry classification, corrections to the level of data being collected and submitted, software changes or upgrades and process and procedural changes, Skattum said.
PE Systems charges schools on a pay-for-performance basis, he said. If the company's recommendations do not result in lower costs, a school pays nothing.
Reducing card processing costs is more important today because most schools do not receive as much funding from the government, said Bill McCracken, the CEO of the Atlanta payments research firm Synergistics Research Corp.
Many schools also lose money when students pay their tuition using a credit card, said Adil Moussa, an analyst for the Boston research firm Aite Group LLC.
Typically, "a credit card payment costs a school about 2%" of a transaction, "which multiplied by the thousands of students paying by card ends up becoming a heavy expense for the school," Moussa said.
Blackboard separately announced Nov. 18 that it signed three colleges and universities to use its BlackboardPay prepaid card program to deliver financial aid payments.
