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Higher Education

Cashless Campus? How About Cardless Campus?

James Lock, Executive Director, Treasury Services

It has been over 20 years since the advent of the cashless campus, when colleges first started using an all-purpose campus card. Today, university grounds are again driving innovation, as many colleges and universities are considering replacing cards with a campus-wide mobile solution.

For a generation that grew up with phones in their hands, it makes sense that mobile payments are gaining traction with college-age adults in the US. According to the Federal Reserve, mobile payments are disproportionately used by younger consumers. Individuals ages 18 to 29 account for 37 percent of mobile payment users but only 22 percent of all mobile phone users. In addition to having a mobile-ready audience, the college campus is unique because your constituent base makes frequent payments in a defined geography.

But what’s in it for the institution? There are a multitude of reasons why colleges will be the launching pad for mobile payments, but the most compelling arguments are the most simple.

  • Service efficiency and enrichment—College students like mobile payment technology because each transaction processes quickly. The length of time they wait in line at the cafeteria, bookstore or sporting event decreases, effectively increasing the number of transactions the university or merchant can process. There’s a lot of opportunity to improve the student experience, and institutions can customize the transaction—before, during and after—to fit their campus culture. 
  • Administrative cost savings—While students might leave their houses and forget their keys, wallets or IDs, they are much less likely to forget or lose their phones. Removing cards from the scenario reduces administrative costs in labor, printing time and maintaining inventories of credentials.
  • Greater security—If a criminal steals a magnetic stripe credit or debit card, he or she has access to that person’s account. However, it’s very difficult for a would-be thief to access sensitive information when the transaction is made via a mobile payments solution that uses tokenization and encryption. Additionally, since the merchant wouldn’t process or collect the customer’s information, the liability for the merchant decreases.

Even with the promise of convenience and increased security, when one considers the merchant’s perspective, it’s not surprising that mobile payments have been slow to catch on. Updating POS systems is a costly undertaking.

This poses a difficult challenge for leadership in higher education institutions: How do you identify and quantify the value of demand for mobile payments on your campus, in order to justify the cost of upgrading? 

The first step is identifying who, where and when mobile payments will be used on your campus. Universities that see high benefit for mobile payment solutions tend to have high-volume transactions at various locations on a consistent basis (e.g., on-campus dining services, sales at athletic events and theatre productions, etc.). There are also external factors to consider, such as the upcoming EMV liability shift in October 2015 (see below), which is a powerful incentive for institutions (who haven't done so already) to upgrade POS systems.

In the end, every institution is different, and while for some institutions, a mobile payment solution is still a long way off, one thing is clear: We are in a period of growth and rapid change when it comes to payment systems. Millennials will likely push mobile payments forward, and the next generation of students is going to drive payments innovation even more. It seems that mobile payments will become ubiquitous both on and off the campus.

What Is the EMV Liability Shift?

  • What Is EMV?
    EMV is becoming the global standard for credit card and debit card payments. Named after its original developers—Europay, MasterCard and Visa—EMV technology features payment instruments (e.g., cards, mobile devices, etc.) with embedded chips that store and protect cardholder data.
  • How Does the Liability Shift Affect You?
    After the liability shift (October 1, 2015), if there is an incidence of card fraud, whichever party is the least secure will be held liable.

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