Who profits from University payment networks?

Brian Roemmele

Brian Roemmele, Alchimiste et métaphysicien

Répondu il y a 337w · L'auteur dispose de réponses 1.3k et de vues de réponses 11.9m

This is a multi-billion dollar industry. Most of the profits go to the system provider and the educational facility.

Hidden Payments Industry That Is Growing Rapidly

Today this is still a fragmented industry. There is a drive for consolidation and the momentum is taking hold. One of the growing leaders and growing larger every year, with few challenges is Heartland Payment Systems, of Princeton, New Jersey and their Campus Solutions division. There of course are others, for example Oracle Financial systems is also a large player but does not offer the wide ranging systems to effectively compete with Heartland. They are primarily a backend system, however Stanford University's SU PCard is operated by Oracle. Oracle is looking at becoming more competitive in this space in the future so I would not count them out.

Heartland's Campus Solutions was really formed by the acquisitions of General Meters Corporation in October 22, 2007 and School-Link Technologies, Inc. in October 11, 2011. General Meters Corporation had a significant portion of many state and private Universities when they were acquired. The School-Link Technologies, Inc acquisition expanded a market reach to K-12 school systems, both public and private as one of the largest companies in this segment.

Rather dry marketing overview of the OneCard product.

Heartland created the OneCard system as a customizable solution for just about any education environment. However, there is far more then just Payments involved with these solutions they are really quite complicated and all encompassing. This really creates very high barriers to entry into this market. There is also a very difficult and long vetting process that most education environments require. There is always going to be competitive bidding, however on some contracts it is only Heartland bidding since few players offer the depth of product offerings.

How Does Campus Solution’s OneCard System Work?

In a typical scenario the student is issued a private label Discover debit card issued through the Central National Bank. This is a prepaid debit card for each student to make on- and off-campus purchases. They must meet and satisfying Title IV, Regulation E and PCI requirements.Students have mobile and web access to their Discover card information, transaction history and transfers to other accounts through the online portal. This speeds up the receipt of financial aid refunds 5-7 days sooner than with traditional checks. The debit card anywhere Discover cards are accepted including ATMs.

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Rather dry marketing overview of the dining aspect of the OneCard product.

The University has back office tools to calculate the direct awards, excess disbursement amounts and payroll distributions, then prepares a simple ACH file and submits it to the bank to load student debit cards.

  • Online & Offline Bookstore Management
  • Contrôle d'accès sans fil
  • Security Identity Readers
  • Food Service Business Management
  • In-Building Emergency Notification System
  • Information-Driven Video Surveillance
  • Mobile Communication Solution
  • On-Demand Transaction Enabling Applications
  • Integrated Off-Campus Solutions
  • POS/Inventory Management Interface
  • Access control to Network Vending, Laundry, Copier Terminals
  • Site access control though Zigbee Coordinator and Zigbee Door Lock systems
  • Parking access systems
  • Access control using RFID, NFC, Mag Stripe, Chip Card and Biometric
  • Text Messaging Notification System, email Notification System
  • Student Voting systems

Your Smartphone Is Your Student ID Card

They recently upgrade the system to ultimately fully implement the use of smartphones. MyPay is a virtual student ID card in lieu of their physical ID. The MyPay app enables students to make on-campus purchases at bookstores, vending and laundry machines, dining locations, print and copy stations, and more.

MyPay can send payment information to the point-of-sale terminals while waiting in a checkout line, allowing cashiers to simply press a button to complete a transaction.

The MyAccount is like a bank account app and enables students to manage their OneCard account, check balances, report a lost/stolen card, add funds, purchase services such as campus events, meal plans or parking passes, as well as upload photos for the student ID system.

The OneCard Mobile Admin gives the ability to manage the OneCard System from a mobile device with administrative features including viewing student card use information and managing building and room access control for additional security.

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Modèle de revenu

Heartland generates revenue from a number of direct and indirect sources. The Off-campus merchant program has no cost to educational organization and it allows the surrounding town to directly participate in the closed loop side (non Discover) of the OneCard. This certainly creates a “preferred” merchant list for students and will drive significant traffic to participating merchants. Merchants can pay from 1.5% - 3% with some commissions returned to educational organization. There is also the Give Something Back network that allows for fundraising built around the OneCard network and participating merchants.

Heartland also generates revenue from the hardware sales, software sales, support, services, etc. In most cases these systems support themselves by the direct and indirect revenue stream generated for educational organization.

Just One Of The Hidden Opportunities Startups In Payments Are Missing

I am neutral on Heartland as a company. There is now doubt they have made significant mistakes in the past. However Campus Solutions is a brilliant move into this huge market and they have years of head start.

As I mentioned there as a bit of a roll up taking place in this sector. I seem to always surprise Analysts and many startup companies when I point out use cases like this. Billions of dollars are running through these private networks and most observers in Payments, investment community and the tech media do not notice.

There are many other examples that are similar that have just as large of a market potential and not a single new Payments Startup has noticed (I confirm this on a weekly basis). While most of the startups in the Payments space are focused, rightly so on making the best possible experience and reaching for the lowest hanging fruit on the trees, some of these companies are fully ignoring huge market opportunities because they refuse to study history and value wisdom from industry experts. By steadfastly wanting to reinvent the wheel all over again and not working with people that really know this stuff, potentially large markets drift by like ships in the night.

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In the next few years we will see these types of payment solutions morph to far larger systems with even more opprotunities.

John Tullis

John Tullis, a travaillé chez Visa

Répondu il y a 337w

There are a few different parties who participate in and profit from these programs:

  • Consultants who advise universities and banks on program set-up and operation
  • Software vendors (Blackboard, CBORD, etc) who provide tools that run these programs
  • Universités who charge fees to vendors, receive interest on deposits, and sometimes create co-branding arrangements banks for MasterCard, Visa, or pin debit programs (transaction fees historically have often been higher than GPC cards)
  • Banques who sometimes acquire new account relationships with bank payment functionality or provide Visa/MasterCard products that generate interchange revenue

Ohio State's BuckID is one of the largest programs I know of, and they did about $10M in transaction volume in recent years. I do not have their most recent revenue, but a 2003 BlackBoard case study indicated that they produced about $340,000 in transaction fees and $86,000 in interest on deposits for their program in 2002.

Buck ID Case Study: http://library.blackboard.com/do...

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