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To usher in the 2007 fall semester at Slippery Rock (Pa.) University, Heartland Payment Systems introduced a student ID card system that includes a separate contactless chip that students can attach to their mobile phones. The system enables students to use their phones or magnetic stripe ID cards to purchase all campus services, including tuition. Many local merchants also accept the school's proprietary contactless payments or ID cards.
For its innovation and implementation of the Slippery Rock student ID card system, known as Give Something Back because of a charitable gift component, Heartland is the winner of the Cards&Payments 2008 Best in Payments Editor's Choice Award.
Slippery Rock's president, Robert Smith, inspired the move to the contactless system, which also still supports magnetic stripe card transactions. Smith asked Heartland, which processes card transactions at 965 schools and universities and has held the Slippery Rock account for a decade, if it had a product to enhance the university's existing ID card.
Robert Carr, Heartland president, had been considering contactless card applications and came up with the idea of using contactless technology tied to a cell phone, a device highly popular with students.
Heartland recently acquired two companies whose core businesses fit right into what the company would need for its Slippery Rock project. One, Debitek, manufactures card readers for vending machines, washers and dryers, and copiers. The other, General Meters, runs campus programs for ID cards, meal-plan management and building access.
Heartland has its own software for credit and debit card terminals, so the company had all the parts necessary for such an initiative.
"Our motivation is to develop and build additional merchant relationships and sell them more products," says Barry Welsch, Heartland director of special products.
Welsch says the company believed it made sense to go beyond mag-stripe cards and adopt a device that consumers might one day use widely for payments and to access various services and products–the cell phone and its radio-frequency identification capabilities.
Last August, the school issued the new ID cards to 8,500 students and 1,000 faculty and staff. About 4,500 of the cards support contactless payments.
Most cell-phone manufacturers have yet to add contactless technology to their devices. So Heartland issued an adhesive contactless tag, just larger than a postage stamp, that students could stick to their phone or to a key fob.
About 3,000 campus-ID cardholders tie the cards to prepaid accounts. Parents can go to a special Web site to transfer funds to students' card accounts.
Heartland rewards participating merchants by reducing the interchange rate to 1.5% of the sale. The interchange rate on a typical bankcard can approach 2%.
More than 30 merchants in the Slippery Rock community accept the cards, up from an original six. They include a supermarket, some restaurants and hair salons, and a towing service. The school lists the participating merchants on its Web site.
Each time the card is used off-campus, Heartland donates 0.5% of the purchase price to Slippery Rock. Students and other cardholders also can designate up to 1% of purchase price as an added donation to the school or another charity.
The Give Something Back charitable initiative came from Carr's personal interest in philanthropy and student scholarships. "The underlying goal is to introduce them to the concept of giving back to the school," says Welsch. "They can keep the cards when they graduate."
Heartland issues the cards and phone chips through its own private label. By avoiding the branded card networks, it is able to keep down processing costs and thus charge merchants the lower interchange fees. CP
