Grade School Lunch Programs Get a Taste of Debit Cards

  Lunch time in the cafeteria of Golf Middle School is a daily scene of controlled chaos. Children file through the line, cheering or wrinkling noses at the day's food offerings. Friends sit in their usual spots while school staff members good-naturedly enforce civility. A well-timed joke causes milk to shoot out a child's nose, creating a lifetime memory for the spewer and his pals.
  But instead of handing staff paper tickets in exchange for meals, as in previous years, students now use debit cards.
  Golf Middle School in Morton Grove, Ill., is using a lunchroom payment system called Cafe Terminal, which enables students to swipe debit cards or enter PINs at each lunch period to draw funds from prepaid, Web-based accounts.
  Such lunch-line debit systems carry several advantages for schools: no paper tickets for students to lose, no cash for anyone to steal, easier documentation for federal school-lunch programs and easier account loading for parents. But implementing school-lunch payment systems can be a challenge for schools and payment vendors alike.
  It is hard to pinpoint how many of America's estimated 12,500 public schools use electronic cafeteria authorization systems. Estimates from vendors who serve the market say from 60% to 70% of schools use electronic payment systems, with varying degrees of sophistication. Some eight to 10 companies sell products such as online payment accounts, system integration and point-of-sale equipment to schools, say vendors, most of whom serve state or regional markets.
  Primary and secondary-school cafeterias are a market for growth, with many still relying on paper tickets or cardboard punch cards presented in cafeteria lines to keep track of which children eat lunch.
  Golf Middle School Principal Keith Westman expects the school's first year with an electronic debit system to require occasional adjustments. "Right now it's still new," he says. "Most important to me is it's easier for the parents and easier for the kids."
  Last fall, during the first few days of the new school year, students entered five-digit PINs in the new system before they sat down to eat, instead of using debit cards. "There was this huge traffic jam," Westman says, adding that students' food got cold while they waited their turns to enter PINs.
  So staff decided to have students sit down and start eating first. Then teachers directed them, one table at a time, to leave their food and file through a line at a folding table. There the children punched their PINs into a terminal linked to a standard personal computer. The system charges prepaid accounts with $0 to $2.40 for main meals, depending on student status as full-price, reduced-price or free-lunch recipients.
  During one lunch period, Alayna Klein, an administrative assistant at the school of 266 students located northwest of Chicago, prompted students to enter their PINs. She then checked a page on a computer monitor to make sure each student's name and picture matched the child standing before her.
  "Good job!" she said as students successfully entered PINs. "Oops. Try again," she told those who hit wrong keys. "Wow, speedy fingers!" she said to a child whose digits flew across the pad with top video-game coordination.
  A month into the school year, the staff decided to issue debit cards to replace the PIN-entry system. There is more of a risk students will lose or forget their cards, but students swipe cards faster than they enter PINs, which moves them more quickly through the line and eliminates the need for teachers to seat students then roust them back into line to enter PINs, school officials say.
  "The swipe card has been really great," Westman says. "We have one point of sale and can get two grades through the lunch line in about two minutes. The PIN process took roughly seven minutes."
  Convincing schools to try new payment systems can be a slower-than-average process. "The challenge working with schools is the long sales cycle," says Dave Thorson, president of RevTrak Inc., a Minneapolis-based independent sales organization that provides software and merchant-account setup to help some 300 schools in 28 states accept credit and signature-debit card payments.
  "If you're an ISO and you're selling credit card processing, you can go down the street and there are people doing 10 deals a week selling terminals. This is an industry where you could, from first contact, plan on a 12-month sales cycle."
  FEE OPTIONS
  RevTrak does not offer its own POS system but links other systems to its Web-based account-management and payment site. Schools may pay for RevTrak software and services themselves or pay nothing but pass interchange and processing costs on to parents as fees for some or all transactions.
  But even without setup costs, school boards and staff must be convinced that online payment systems or electronic cafeteria authorization equipment is worth a change. "Schools have all sorts of conflicts," Thorson says. "Food-service departments are at war with business departments, business departments are at war with IT departments. It's a long, complicated business cycle."
  Still, RevTrak and other vendors have carved out niches for themselves in primary and secondary schools.
  Naples, Fla.-based Comalex Inc., which provides Golf Middle School's payment system, claims between 2,500 and 3,000 schools use its Web and POS products, which include PIN, card-based or biometric-authentication options.
  The company began offering computer software to process government free- and reduced-fee lunch accounts in 1992 and added a POS-debit system in 1994. It opened a Bank of America merchant account, with processing by Nova Information Systems, about nine years ago through the membership discount store Costco Wholesale Club.
  Non-tech-savvy parents can load their kids' online accounts by dropping off cash or checks at school offices. But they are encouraged to go online to load funds to Comalex's Cafe Prepay accounts using one-time or recurring automated clearinghouse debits from their checking accounts for $1 per transaction. Such transactions post within three days.
  Parents also can make one-time or recurring payments with credit or debit cards, but they pay fees of 6% of the transaction amount. Funds are posted to students' accounts three times per day: just before breakfast, just before lunch and just after lunch.
  Schools pay a one-time $99 setup fee per campus for the Comalex service.
  Shawn Tucker, Comalex vice president, says lunchroom staff can take between one and five hours to learn to use its touch-screen system, based on how much computer experience they have. The system responds to any unusual entries they try to make with "Are you sure?" messages to help avoid mistakes.
  Tucker says staff with little or no computer experience often are worried they will not be able to operate the POS system. But reassurance and careful scheduling of the first electronic lunch hour help ease them into the computer age.
  "We schedule it for an unpopular meal so they're not as stressed," he says.
  Altoona, Penn.-based Food Service Solutions Inc. also offers PIN and card-based systems. But it most aggressively markets its biometric fingerprint-authorization system, built with components from Tacoma, Wash.-based Sagem Morpho Inc.
  The company has contracts with about 300 elementary through high schools around the country and about 100 colleges.
  BIOMETRIC PROBLEMS
  Biometrics and children, though, can be problematic. Food Service Solutions CEO Mitch Johns says the system often has difficulty reading the prints of children younger than five, whose ridge-valley print systems are still developing. For children older than five, the failure-to-enroll rate is about 2%. Failure to identify enrolled prints ranges from 3% to 7%, caused sometimes by cuts, dirty hands or the need to re-register students whose prints have changed slightly with growth, he says.
  Children whose prints do not work for biometrics or whose parents object can enter PINs instead.
  Food Service's POS equipment can be pricey, from $2,000 to $6,000 per line, depending on whether the school provides its own PCs.
  Parents pay $1.50 per ACH transaction or 6% of the payment amount when a credit card is used to load online accounts.
  BUILT FOR SPEED
  Johns says that while paper tickets or cards may be easy to lose, they are hard to beat for speed. "You're not going to do much faster than 'Here's my ticket; give me lunch,'" he says. "The speed's going to come in a lunch line where you get rid of cash."
  That is particularly true in high-school cafeterias, where students more often are entrusted with cash to pay for a wider choice of entrees and snacks, Johns says. The pitch to high schools and parents is better accounting with debit systems that eliminate cash.
  "At the high-school level, 30% to 40% of that cash never makes it to the lunch line," Johns says. "It's spent for other purposes."
  Going electronic also reduces the chance of theft by bullies or school staff and provides easier proof of nutrition consumption for federal reimbursement, he says.
  In the Golf Middle School lunch line students eat regardless of their account status. But the system is configured to automatically generate e-mail or paper reminder letters that office staff can send to parents whose children's accounts are negative. "Before, when kids ran out of tickets, they reminded their parents and parents wrote checks," Westman says. "Now, kids don't have to remind their parents. They shouldn't have to."
  Some parents still stop by with cash or checks, but in-person payments have declined dramatically as more parents have begun to pay online with Cafe Prepay. "Before, it was brutal," Westman says. "The line on Monday mornings to buy lunch tickets was long, and the parents were frustrated because students would lose the cash or check or the tickets."
  Westman says many parents deposit funds semi-monthly or monthly, but at least one child's parents loaded $400 in his account to last for several months. Westman says he is surprised by "the lack of personal accounting" by some parents. "One parent called and said, 'I put $25 in my child's account, and now I have $56 in the account.' The parent had paid online, sent a check and paid cash all in the same week," he says.
  Westman considers the learning curve from the new system worth the effort. He says the system provides quicker and more-convenient handling of school lunch payments for parents, staff and students.
  During one lunch period, Golf Middle School students seemed a lot more interested in how soon they could grab their post-lunch snacks than in how their accounts were debited.
  Students can purchase one bag of pretzels or baked chips for 50 cents extra. Parents can block such purchases by only funding accounts for a certain number of main meals. And they can see online whether their children skipped lunch, bought only the main meal or added a snack on a particular day.
  No payment system can completely overcome a child's love of chips over protein and vegetables. But at least paying for school lunches is getting easier.
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