What should we expect to achieve by going cashless?
It is very important that organisations have clear goals as part of the strategy for going cashless and agreed measures of success. These could include delivering better service levels, reducing operating costs, insurance premiums or queuing times in retail outlets or delivering better onsite security, expanding the use of the student ID card and contributing to an improved student experience. This is not an exhaustive list and each university will have their own success measures, but with clear goals agreed the choice of technology and suppliers is much easier and will mean a good project outcome.
What is meant by going cashless?
Going cashless simply means using less cash and reducing the reliance on using physical notes and coins. There are many options, so forming a strategy can be daunting, as you don’t want to commit to a technology that will be redundant in a few years’ time.
Cashless systems fall into two brackets.
Open Loop – involves financial institutions at the point of sale as customers pay by debit or credit card or mobile application (linked to a bankcard). Here the card issuer, payment scheme (typically Visa, MasterCard and Amex), merchant services and payment processor are all involved and all take a cut from the sale (a mix of fixed and percentage-based fees).
Closed Loop – balances are held by the organisation meaning no transaction cost at the point of sale, therefore 100% of the sale is retained. Average transaction costs for debit and credit cards were 8p and 33p respectively in 2015, which is fine for higher value transactions but difficult in low-value and high-volume areas, such as university food outlets, shops, print services or onsite laundrettes.
In an open loop environment you would either need to accept you will make a loss on a number of sales or you have to impose a minimum spend limit for card payments. This is very inflexible and does not deliver a positive user experience.
In a closed loop organisation there are no transaction costs so you are able to offer the service your customers demand without having to worry about adverse impact on margins
What other benefits would we get using a closed loop system?
The most obvious one is that a closed system can deliver an increase in on-campus spend as direct increase in revenue (typically 20%), but a further result is that students spend more time on campus, helping ensure they engage more with and in university life.
As funds are kept on campus incentives can be offered to encourage students to top up higher amounts. Once funds are loaded, the student is more likely to spend on-campus rather than on the high street and there is no need for a minimum transaction spend, so 100% of the on-campus sale is retained and students are receiving a better service.
How do we protect existing investments in infrastructure?
A common mistake with going cashless is that each cashless element operates as a disparate system, with each service holding their own balance of funds. Not only is this difficult for the student to manage, it also results in lower user adoption and service use. To protect existing infrastructure and integrate seamlessly with business critical systems it is good to ensure all systems reference one central platform, either using one account for all spend or separate accounts but held in one system.
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