Heartland Payment Systems Inc. says that a marketing agreement with a group of school identification-card providers will help it boost sales of its campus payment card systems to small and midsize schools.
Under the agreement announced last week, Identification Systems Group, a consortium of 40 identification card companies, will offer its clients Heartland's Campus Solutions OneCard system.
Ron Farmer, the executive director of Heartland's campus solutions division, said in an interview that about half the 4,000 U.S. colleges and universities have payment card systems but most would like to have one if they could afford it.
The ISG marketing agreement lets Heartland, a Princeton, N.J., transaction processor, offer the system to colleges that have "smaller staff and smaller budgets but still have the same problems as larger schools," he said.
The ISG relationship, which began two months ago, already appears to be bearing fruit. The OneCard system is used by 120 U.S. schools, and of the 20 that have signed up this year, Mr. Farmer said, most have done so in the past month.
The OneCard system uses a magnetic-stripe identification card or a contactless electronic tab that many students attach to their mobile phones, Mr. Farmer said.
The card and electronic tab are interchangeable, and each is linked to a stored-value account that can be tapped with a PIN. The schools must form partnerships with a bank that will hold the funds in prepaid accounts that can be reloaded through direct deposit, at an automated teller machine, or by transferring funds online.
Students use the cards or tabs to make purchases at campus facilities, such as vending and copy machines, laundries, meal plans, parking lots, and tuition, and to make purchases at participating off-campus sites. The cards can also be used to gain access to buildings.
Mr. Farmer said that his division generates about 10% of Heartland's revenue and that the system can lead to cross-selling opportunities. When a school begins using OneCard, salespeople encourage businesses in the surrounding area to accept the card and are often able to sell other payment processing systems to the merchant.
ISG's members have about 100 offices nationwide, which can reduce marketing and service costs for the OneCard system.
"Because a smaller school has a smaller budget, we can't afford to fly someone out to a school four or five times to make a presentation," Mr. Farmer said. But marketing might now be as simple as having an ISG representative "drive across town," he said.
And because smaller schools typically have small technology staffs that may not be able to manage every system on campus, Mr. Farmer said, ISG can supply local technical support.
Red Gillen, a senior analyst at the research firm Celent LLC, said it is important that banks offer these cards only as debit products because some college students may not understand how to use credit wisely and could get themselves into "hot water quickly."
Mr. Gillen said that many banks see campus card systems such as OneCard as "loyalty plans."
Campus payment cards are like a "Swiss Army knife," capable of providing a variety of financial and nonfinancial services. After a student graduates and no longer needs the card for laundry or dormitory access, the one service likely to remain is banking.
"Obviously it's a way to build customer loyalty at an early age and hopefully retain the same customer over a number of years," Mr. Gillen said. "By establishing a relationship early on and by providing great customer service, it is likely they will retain the customer."