Campus Cards >> The Revenue / Service Balance
More than ever before, campuses are finding imaginative ways to generate
revenue from campus cards to offset the costs of providing convenience and service.
Ten years ago, students at the University of Vermont had to
carry separate ID cards, meal cards, and athletic cards. Today, the single CATcard
combines all of these functions, plus library privileges, an optional declining
balance program called CAT$cratch, access to computer labs, use of vending machines
without quarters, and even a ride on the campus or city buses. Still, UVM is
one of many schools that have felt the need to explore whether a comprehensive
campus card program is indeed a money-maker or an ongoing expense.
Reaching Beyond the Campus
The University of Vermont CATcard, based on CBORD’s CS Gold system (www.cbord.com),
brought convenience and added value to students’ daily lives, and efficiencies
to the university’s operations. But operating the card program also costs
money. As a state institution, UVM was not permitted to charge students for
their initial card, nor is the card operation supported out of the general university
budget. So when the CATcard program needed to find ways to support itself and
to pay back its $250,000 seed-money loan from the university, it began to look
off campus for revenue sources.
“I had some excess capacity in the system that I thought I could parlay into
revenue,” remembers Mark McKenna, the program director of the CATcard Service
Center. By helping nearby St. Michael’s College (VT) get its
card program off the ground, and later doing the same for Champlain
College (VT), McKenna was able to be a good neighbor and at the same
time spread out the costs of all three institutions’ card programs. UVM provided
its sister institutions with consulting and expertise to set up their card programs,
and then acted as an application host, relieving them of the responsibility
of running their own servers and managing their own software systems. In effect,
the two client colleges are able to access UVM’s card office expertise and are
sharing hardware facilities (including redundant servers, disaster recovery
measures, data backup, spare parts, and other expensive resources). The clients
operate the front ends of their own programs, so students and faculty are not
even aware that the card operations are actually being hosted at another location
EXPANDING CAMPUS CARD services need not be costly; services can pay for themselves.
St. Michael’s and Champlain pay UVM about a dollar a month per campus
patron (students, faculty, vendors, etc.). That amount just covers UVM’s
actual costs to support the outside campuses, while providing revenue that keeps
the shared hardware and software infrastructure up to date at a pace that none
of the individual campuses might be able to afford to do on their own.
Another important source of added revenue for UVM comes from a different off-campus
source: the local merchants in Burlington who depend on students to help their
businesses thrive. UVM students can use their campus cards as a form of payment
(called CAT$cratch) at local restaurants, fast food shops, grocery chains, video
stores, bowling alleys, or any of the 120 businesses that have readers to swipe
the UVM card. If a student gets in a fender bender, she can use her CAT$cratch
to have her car fixed at one of three local auto repair shops, hire a lawyer,
even pay a fine to the Burlington Police Department.
The local merchants pay UVM’s CATcard Service Center a sliding fee of
3.25 to 9 percent on the transactions, based on their annual sales via the CATcard,
and taking into account how frequently they wish to receive their payments.
That fee is more than most merchants pay to accept bank credit card payments
(usually around 2 to 2.5 percent), but they get more than just a way to accept
payments for goods and services. The UVM card program promotes its member merchants
on its Web site, gives out goodie bags of products at the beginning of the semester,
and gives businesses more access to students on campus than they otherwise would
By institutional policy, UVM’s CATcard Service Center must break even
every year. Even so, there has been enough revenue to plow back into the program,
making it stronger and more resilient. And about those loans: The card program
paid back its initial five-year loan in four years, and repaid a second upgrade
loan in three years. Now UVM is actively talking to more Vermont institutions,
to get them to sign on with its campus card operations program.
Card Program on a Sh'estring
When Paul Davies came to Sweet Briar College (VA), he saw
at once that his new institution needed a campus card, but he knew also that
things would have to be done quite differently than they had been at his last
job. Davies had been at Duke University (NC) for 17 years,
the home of one of the pioneering campus card programs in the country. “I
was familiar with the Cadillac of campus cards,” says Davies. “Duke
d'es parking decks, dining, vending, door access, copiers, you name it—running
about 350,000 transactions a day.”
Sweet Briar, with its 600 students and its rural atmosphere near the Blue Ridge
Mountains, was not on Duke’s scale. But Davies felt a strong need for
the kind of management tool that a campus card can provide. He felt a card would
give campus administrators a better handle on dining and other campus operations.
As a CPA, he knew how crucial financial controls could be, but he also knew
how hard it would be to justify the six-figure investment it would take to install
a card system, and that he would not be able to hire the technical staff needed
to run it properly. His solution came from start-up CardSmith (www.card-smith.com).
CardSmith offers institutions the chance to let an outside partner purchase
and operate the card system, for which the campus pays an annual service fee.
Because Davies already knew precisely what he wanted, and because CardSmith
did all the heavy lifting, the Sweet Briar card (SBC) was up and running only
six weeks after signing the contract. Benefits became apparent immediately.
Before the card, virtually anybody who looked like a student could walk onto
the campus and eat, even though Sweet Briar has a traditional 20-meal board
plan for students. In addition, the card began to reveal a more realistic view
of what the dining hall’s true costs were. Davies could now calculate
the “missed meal factor”: how many meals the dining program was
actually serving, versus meals that were paid for but skipped. This also showed
what the actual labor costs were per meal served—a measurement that is
also a key tool for quality monitoring. “A large missed meals factor signals
bad service or bad food,” says Davies. “A rumor about bad food is
one thing; missing 50 percent of suppers is more indisputable.”
There were other benefits, too. “The card speeds up the line in the Bistro,
so we don’t alienate paying customers,” says Davies. Plus, the laundry
service is showing increased revenues; students can use the card in the library
for copies or other fees; the CVS in town now accepts the SBC card; and parents
like the declining balance accounts, which also serve as a convenient budgeting
tool for families. The next steps for Sweet Briar will be to add vending, says
Davies, and to evaluate when to add card access to key buildings and rooms.
Did the introduction of the campus card enhance Sweet Briar’s revenues?
“It’s not all about revenue enhancement,” insists Davies.
“It’s about the quality service that students expect today, to have
things at their fingertips 24 hours a day. It’s about adding a level of
sophistication. And it’s a cost management tool.”
Being able to outsource the card system was crucial to Sweet Briar, Davies
admits. “I couldn’t imagine doing this if I had to buy my own hardware
and hire an IT person. We would still be using a paper system.”
Cost Savings on a Large Campus
Louisiana State University is a big place, so Director of
Contracted Auxiliary Services Mark Kraner wants to make sure that the university’s
Tiger Card reaches into every nook and cranny of the 31,000-student campus—and
synergy is the key to making the card program successful.
“It is a philosophy of mine,” Kraner says, “that everywhere
a student gets services, the card is there. Even if it’s only a service,
and you’re not gaining revenue, you want your card to be the one they
Small wonder that LSU recently made a large investment toward pulling all its
card operations together to create the kind of penetration and synergy that
Kraner envisions. Starting in spring 2002, LSU converted its several card programs
to Blackboard’s Transaction System (www.blackboard.com),
bringing dining, door access, the library, the recreation center, the athletics
program, and other card-based services and programs under one roof. LSU procured
the help of Blackboard professional services to convert from the old systems,
upgrade the equipment, and re-card 50,000 people within a 90-day window. The
initial investment: $1.3 million to buy equipment, run wiring to new locations,
and hire staff to set up and run the program. Some of the investment was shared
by the university’s partners (laundry services and vending companies,
for instance), who paid for the readers for their own equipment. Kraner points
to a range of savings, revenue sources, and less tangible benefits that justify
the expense. For starters, he says, just rolling all the card programs into
one resulted in a major cost savings to the university. But from a revenue-building
standpoint, Kraner’s experience at past institutions had already convinced
him that students spend 7 to 10 percent more with a card. Not surprising then
that at LSU, since a 5 percent discount incentive for using the card at the
bookstore (for textbook purchases made only with the card) was instituted, bookstore
sales have steadily increased without cannibalizing cash sales.
There are some less obvious benefits to the university of taking payments on
a campus card. The average deposits have steadily increased and the “float”
from those funds adds to the bottom line. Then, too, just eliminating the handling
of cash saves money. “That’s one of the hidden benefits,”
says Kraner. “The university would like to see fewer places handle cash.
There are too many opportunities for mistakes or loss. You have to pay people
to count the cash and pick it up, and it takes a few seconds longer to carry
out a cash transaction, so you have longer lines. If we get to cashless operations,
we have reduced costs.”
As for off-campus merchants, they are a significant source of LSU’s card revenue,
but off-campus volume still runs third behind the bookstore and dining. Kraner
believes there is a potential to reach $1 million in off-campus sales, but warns,
“Off-campus is a revenue source, not an end-all.”
The good news is that LSU’s card program is flourishing. The program
accepted $2 million in deposits three years ago, and this year is expected to
reach $5 million. But for Kraner, it’s most important to keep expanding
the card’s reach. He is hoping to extend cooperation with nearby institutions,
so that deposits made on one campus can be used on another. And he sees potential
for using the card as part of the Blackboard Learning System, eventually making
it easier for students to take courses at cooperating institutions.
In the end, though, the real measure of success is not the revenue alone, but
whether the card makes students’ lives easier. Kraner’s goal is
ambitious: “TigerCASH is a brand. I deal in brand recognition. I want
people to come to see our symbol—the triangle with a tiger eye—and
trust our program, so that we can be everything and do everything for them.”
Paying for Expensive Benefits
Trinity University (TX) is heavily committed to using its
own Tiger Card for electronic door access, which can be the most expensive feature
of a campus card program. For a relatively small student body of 2,500 students,
Trinity has installed a relatively pricey access network. Trinity uses CBORD’s
Odyssey PCS system to run its card program, and uses electronic locks from Best
Access Systems (www.bestaccess.com).
All residence hall exterior doors boast electronic access, as do 95 percent
of the academic buildings. One residence hall even has 160 room doors equipped
with card-based locks.
Other facilities also have been equipped to go the extra mile for student convenience.
There are 29 laundry rooms distributed around the campus (so that students never
have to walk far), all accepting card payments.
Even so, “This is a very expensive technology to deploy,” admits
Jerry Ferguson, director of Trinity’s Tiger Card program. “Our job
has been to generate revenue streams to pay for it.” So, Trinity has solidified
its card revenue through imagination and innovation, and by paying careful attention
to the needs of its students. For instance, after some students were cited by
the Recording Industry Association of America for downloading music, and ended
up in court, Trinity provided a safe alternative to illegal downloads, based
on Tiger Card discretionary spending accounts. The university has partnered
with Internet music vendor Cdigix (www.cdigix.com)
to enable students to download from a collection of two million tracks, and
charge the downloads to their campus card accounts.
Students pay $3.49 per month to download music, and $.89 to burn a track. “We
sell [the new program] to the parents as insurance [against legal action],”
Trinity also makes it easy to put money into a student’s account. A relative
or friend can create a gift by going to the Maintenance page of the Tiger Card
Web site and entering the student’s ID number and the gift-giver’s
credit card information. There are also unattended value transfer stations around
campus that let students or family add money to a student’s discretionary
There are too many opportunities for mistakes or loss
in cash-handling, so cashless (campus card) operations mean reduced costs for
Louisiana State University.
Trinity supports the card program with revenue from a $50-per-semester student
card fee, a 3 percent charge to university departments that make use of the
card, and fees from the Barnes and Noble bookstore (www.bkstore.com)
and other vendors. The university worked out a favorable deal with FedEx Kinkos,
to operate its copy center. The shop d'es not have to accept cash, only Tiger
Card payments and in-house departmental charges. That reduces FedEx Kinkos’
operating costs, so the company is able to give better terms to the university.
Over the four years since the Tiger Card program launched, card deposits have
grown from $250,000 to $2 million. Trinity has developed its card program carefully,
with plenty of open access to the process, including student representation
in decision-making. This is because, for Trinity, the card is more about service
“Except for the very largest operations, you won’t find any school
that says it wants to make a profit off a campus card, because I don’t
think you can,” insists Ferguson. “We want to offer cutting edge
technology, particularly for door access and other kinds of services that students
expect these days. If we also can use the card to offset the expenses, so much
In the end, whether an institution outsources or self-operates its card program,
expands it aggressively, or keeps it simple, the key to managing a campus card
program is to keep the larger picture in mind. With or without the built-in
revenue to offset the expense of the program, ultimately, a card program will
succeed if it makes campus life better for students.
Inside the Card Programs
How do the campus card vendors see their plans? This sampler of snapshots is
a good place to start your program search.
Founded in 2003 to provide hosted card solutions. Managed by people who worked
at AT&T from 1995 to 2000, when AT&T was a system provider of card systems
to higher education. Currently has six higher ed clients and two are private
high school clients. Target market consists of small to mid-size schools for
which the cost and challenge to own and operate a card system is not practical,
schools of any size with a limited card program, and schools with multiple campuses.
Revenue model. “With everything included, the cost of having CardSmith
host and turnkey-manage a card program is typically between $30,000 and $50,000
annually,” according to Brian Farley, VP for Business
Development. “As far as off-campus revenue g'es, if you can reach $500,000
to $1 million a year in discretionary sales, then you will have a successful
program. At that level, an institution can expect to earn $20,000 to $30,000
per year toward the cost of the card program, just from off-campus merchant
revenue. Other revenue opportunities include increased sales at the bookstore;
campus dining, vending, and other auxiliary services; cost recovery from print
and copy operations; float on prepaid funds on deposit; administrative and lost
card fees; etc.” Farley adds: “A card program generally is not a
huge money-maker on its own, but a CardSmith program can create positive cash
flow for an institution and deliver a high-value service for students and parents.”
Advice. “Some schools worry that spreading the card off campus will be
a threat to their dining operations and providers,” says Farley. We’ve
proven that you can benefit your on-campus dining operations with a well-run
card program. Done right, the card program lifts all boats, on-campus and off.”
In the card business for 30 years. Acquired Diebold Card Systems in 2005. Currently,
over six million students use CBORD cards. Maintains two product lines, Odyssey
PCS and CS Gold.
Revenue Model. From Bruce Lane, executive VP: “How much d'es a card system
cost? There is no pat answer. How much of the elephant do you want to cover?
For off-campus transactions, schools charge merchants 10 percent or more. They
are used to paying maybe 1 to 2 percent to Visa. So over time, that rate will
have to come down.”
Reasons to have a card program. “A well-evolved, well-developed campus
card system is increasingly an expected part of student life,” says Lane.
“Kids are savvy. They hear the talk among older siblings and friends.
The card program is one of the things they expect to hear about on the campus
tour. It is one of the things that can keep a school in the game or distinguish
it. Schools where it is largely about selling stuff think first about making
money. But other schools are more interested in offering a large range of services
and privileges managed by a card swipe. Those are the campuses where service
Advice. “The three legs of a card program are students, parents, and
administrators. If it d'esn’t benefit all three, it won’t last.”
Founded in 1997. Entered the campus card market in 2001 by acquiring CampusWide
Access Solutions (formerly an AT&T business) and Special Teams, a division
of College Enterprises Inc. In 2003, Blackboard purchased SA Cash, which became
BbOne, Blackboard’s off-campus solution. Blackboard offers the Blackboard
Transaction System for dining, commerce, and access. Provides support for off-campus
transactions through the BbOne service, and supports online transactions via
the Blackboard Community system.
Revenue Model. “On a campus with 20,000 people, off-campus enterprises
might add $40,000 in revenues to the bottom line,” says Tom Bell, VP,
Commerce Industry Relations. “You can also earn
interest on the float. If you have initial deposits of $4 million and keep them
for a few months, you can earn $30,000 to $50,000 in interest.”
Management Tool. “From the CFO standpoint, the typical academic calendar
only gives you about three full months a year to generate revenue,” says
Bell. “Getting good reporting and being able to make quick decisions is
Advice. “At first, card programs were an afterthought—you might
find a server located next to the deep fryer. But card systems have evolved
from a dining services utility into a campuswide solution. A place like Penn
State sees 20 million transactions per year. If that d'esn’t qualify as
an enterprise-level issue that deserves the attention of the CFO and the CEO,
then I don’t know what would.”