Ask anyone familiar with the cashless payments business whether there is a particular sector that offers near limitless potential in terms of revenue and innovation, and the answer is invariably campus environments. There are lots of reasons for this optimism. Certainly, in such traditional campus settings as a university or healthcare facility, the desire to provide uniform methods of payments and identification that are secure, reliable and ubiquitous makes much sense for the consumer, and for administration.
Practically every college and university in the country has already invested in cashless solutions in some fashion by offering campus cards with payment capabilities to staff and students. Their presence is expanding into the high school and middle school sectors, along with medical centers, office parks and military installations. Administrators, employees, students and merchants are learning that there is a lot to like about these payment solutions.
The campus card is often based on an identification card and physical access control, but can also be used for commercial functions. These include on-campus foodservice account access, links to a charge account for on-campus purchases, event access, and in more sophisticated deployments, the ability to pay for purchases at enrolled merchants outside of the campus itself. Occasionally, they are branded payment cards, allied with Visa or MasterCard, for example.
REASONS FOR OPTIMISM
From a demographics perspective, the campus card is perfectly aligned with the tastes of younger audiences. In college settings, for example, students have a great propensity to use debit cards to make purchases in stores, online and at the growing number of cashless vending machines. It is an audience that is quite comfortable with the thought of using cards for everyday purchases, a trend that shows no signs of abating. On many campuses, these behavioral and demographic considerations provide the impetus that college administrators are looking for when deciding when and how to deploy cashless payment technologies into the campus environment.
From a convenience point of view, campus cards enable the consumer to make purchases in an efficient and cost-effective manner. Many universities incorporate a wide array of retail operations under their campus card umbrella, enabling purchases in onsite stores, vending machines, kiosks and other retail operations that extend off campus into the neighboring community. This allows seamless cashless payment with a number of merchants in the proximity to the campus -- like restaurants, cleaners, grocers, gas stations, auto mechanics and a wide array of other services that all generate significant income from the personnel that attend, reside at or make their livelihood from the institution. According to some universities, approximately 40% of all food purchases take place off campus, highlighting the need for them to incorporate neighboring retailers into the payment ecosystem.
The merchants certainly see the value of participating in these types of programs, and there are a number of initiatives underway around the country to help bring merchant and consumer together in a unified campus card system. Campus card solution providers like CBORD and CardSmith, which serve approximately half the campuses in the U.S., recognize this growth potential, and have deployed dedicated teams to sell the merits of the campus card program to neighboring merchants. Each has achieved solid success in bringing retailers to the appropriate card programs within a number of university markets.
There's also a sense of community that goes hand-in-hand with university-issued cards. Universities and other image-conscious institutions are acutely aware of the power and appeal of the brand. For instance, one of the audiences most coveted by university administrators are alumni, who continually demonstrate their support for the institution through donations, attending events, and various other activities that add to the vibrancy of the school. Campus cards provide schools with compelling marketing opportunities to bring alumni and similar audiences into the campus community. On the highest level, the campus card has proven to be an important tool for the university to establish and reinforce the power of brand, and attract new strategic partners into this economic ecosystem.
With the benefits of campus cards being so convincing, a number of institutions -- and providers -- are feverishly looking for new ways to generate more value and more revenue out of these offerings. But there's something missing from the current campus card solution that would provide more intrinsic value to all participants in the ecosystem. There are very obvious and severe limitations in the form factor itself.
The technology associated with campus cards, which is usually conducted through magnetic stripe technology, is best suited for identification and basic payment transactions. But the card format does not handle emerging new services that are increasingly attractive to consumers, merchants or institutions. Integrating these services is the domain of cloud-based technologies that work in concert with smartphones, giving providers enormous flexibility to expand the scope of the campus card program. Not surprisingly, smartphones are the primary tools for communication, information and personal needs. They can also help universities accelerate the transition into efficient, cashless environments.
It's true that payments are essentially table stakes for campus cards providers, but the real attraction for users, merchants and administrators is the added mobile commerce services that dovetail with payments. Loyalty programs, couponing and redemption, ticketing, mobile advertising and myriad other services can be easily delivered to mobile devices. These functions help buyers and sellers find each other, and enhance the greater sense of community that all the stakeholders in the campus environment are looking to achieve.
The mobile app concept makes tremendous sense for many consumers. The penetration of smartphone and tablet usage among university students is staggering, with some estimates surpassing 65%. Young adults are completely comfortable using these devices as their primary source of entertainment, news, information, social interaction and commerce. The ubiquity of smartphones and tablets in campus environments makes them an obvious choice to leverage a number of mobile commerce features to help unify the entire campus community.
For example, consumers can rely on location-based services to identify qualified and reputable merchants, including brick-and-mortar stores, kiosks and vending machines at which to make their purchases. Users can receive electronic coupons, and share these and other offers with family and friends through texts and social media.
Merchants can benefit, too. Rather than sit back and wait for customers to walk through their doors, retailers can play a much more active role in identifying them through location-based services, and then turn prospects into buyers by delivering relevant promotions directly to their mobile phones. And instead of relying on mass marketing campaigns, the mobile commerce strategy enables merchants to refine their marketing programs with pinpoint accuracy, reduce costs and, ultimately, increase profits.
All of this, of course, benefits the institution, which can actively promote the mobile app to all the stakeholders it serves. By expanding the functionality and increasing the array of campus card solutions, universities have the opportunity to deliver services that are perceived as both relevant and valuable across the entire community.
SIMPLICITY AND EFFICIENCY
IT professionals are aware that deploying campus cards can be a complicated undertaking. The competing needs from a variety of stakeholders -- payment processors, card issuers, merchants, administration and consumers -- all interact in campus card environments. Each brings a different perspective -- and quite often opposing requirements -- to the conversation.
On top of that, most universities have a wide range of suppliers with varied systems that need to be addressed. Services like cafeterias, parking, bookstores and laundry facilities, along with athletic and cultural events, and vending, of course, are just some of the points of purchase that universities need to integrate into the campus card.
By moving the transactional component into a cloud setting, institutions can significantly streamline the entire integration process. Software updates to point-of-sale terminals, compliance with payment card security mandates, and cross-pollination between payment and marketing services are all simplified when conducted in the cloud, as opposed to keeping the intelligence at the hundreds of individual card readers deployed across a campus.
Moving these services into the cloud doesn't necessarily mean that existing infrastructures become obsolete. On the contrary, universities can actually extend the lifecycles of their current card systems by moving the intelligence to the cloud. Terminals can remain in place, and the physical cards themselves can retain their utility as payment forms by becoming an extension of the intelligence in the cloud.
In fact, the ability to use both cards and mobile apps as payment interfaces helps universities further serve their constituents by being able to facilitate a combination of emerging NFC and EMV technologies, along with ubiquitous magnetic stripe solutions. So rather than being boxed into a specific technology, institutions can deploy best-of-breed technologies across the campus that best suit their needs.
While campus cards in their current form provide quick payment or identification functions, they are in effect quite limited for addressing the evolving expectations of students, staff, merchants, administrators and numerous other stakeholders who are becoming more immersed in an apps-driven mobile commerce world.
By placing the campus card intelligence in the cloud, universities and card providers can take full advantage of the plethora of new services that are attracting the attention of all parties in the ecosystem. Solutions like mobile advertising, couponing, loyalty programs, ticketing and other services -- delivered to the user's smartphone or tablet -- substantially increase the value of the campus card program, and in effect extend the lifecycle of the facility's current infrastructure.
It's a concept that captures the attention of the various stakeholders in the campus card environments, and allows the institutions to expand their services without significantly disrupting their current operations. Any way you look at it, cloud-based campus card solutions make tremendous sense.
JAMES LAWRENCE is vice-president and general manager of Apriva's government, campus and enterprise operations. He is responsible for the
strategic direction and deployment of Apriva's products in these sectors. He has more than 25 years of senior and executive management experience in telecommunications, computer technology and business development, and has worked for Motorola, Intel, and several startups. Lawrence also studied aeronautical engineering with the U.S. Air Force.