The Money Movement Channels in Schools: A FinTech Discussion for School CFOs

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The Money Movement Channels in Schools: A FinTech Discussion for School CFOs


A FinTech Discussion for School CFOs

“As far as cash is concerned, it is still very expensive to secure cash.  If a school district is maintaining cash, there are controls and processes that have to be put in place, that amount to an increase in labor costs and security.”

Wayne Brown, FinTech Subject Matter Expert

ClassWallet had the opportunity to sit down with Wayne Brown of The Walker Group.  Wayne Brown is a fintech subject matter expert with over three decades of experience in the financial services and technology industries, including seven years as an auditor for a large global bank.  In our conversation we tapped into Wayne’s extensive knowledge on everything from the cost of accepting cash in schools, to the need to mitigate the fraud that comes with accepting cash, and the changing nature of technology for payments.  We hope you find here useful data that you can incorporate into the business management side of running your schools.

CW: Why should schools embrace technology on the payment side of school business? 

WB: This is a good question.  There are efficiencies and guarantees that the consumer has when they make payments using technology.  For example, when we make payments electronically, these transactions are done in an environment that is trackable.

However, to make the change in payment behavior, the consumer has to feel comfortable.  We have found that security mitigates a consumer’s adversity to change. Having this information about security helps the consumer to adopt to new channels to pay their bills.

We do work, through my client relationships, with school districts. There was one client that had a school lunch program and switched to a payment portal for parents to pay for school lunches and other fees online for their children.  What we saw was, in order for consumers to be comfortable with this technology, this had to be in a secure environment to create confidence for the consumer.

CW: In your seven years an an auditor what kind of fraud did you see? 

WB: Most of the transactions that we tracked were for security fraud and fraud with regard to bank branches.  We were auditing fraud that may happen internally within the bank.  There are now more controls and regulatory requirements in place so the consumer is protected. In addition we focused in other areas in the bank including Corporate Trust, Branch Administration, Stock Clearing, Operation Business Units and Securities Divisions.

CW: Can you speak on the use of cash and those who don’t use the banking system (referred to as the unbanked or underbanked population)? 

WB: We know that cash will always be around because there is a segment of consumers that are very comfortable with cash.  They transact business using cash based and make their payments in person. I have been involved in the unbanked segment, for over seventeen years. I worked at one of the industry’s leading service providers for unbanked that was recently purchased by PayPal.  We do see financial services looking very much at the unbanked as an underserved constituency.

As far as cash is concerned, it is still very expensive to secure cash.  I have seen situations where large school districts have moved to other forms of payment because the cost of cash is so high. If a school district is maintaining cash, there are controls and processes that have to be put in place, that amount to an increase in labor costs and security.

Also, we do know that banks in certain situations have put limits around the deposits of cash which may have an adverse affect on schools that have to deposit the cash received  That is why branch banking in many areas has declined as consumers move to digital solutions to remit payments.  But [the question does remain] since cash is always going to be around as a channel, how can we create and help organizations to not only see the cost of cash as it increases but to give them security?

CW: Can you speak to the problems of the accepting cash in schools to pay for school lunch, school fees and club fees? 

WB: One of the things we have seen and the feedback that we have received from school districts is that now somebody [in the school] has that cash, where is that cash sitting? What are the controls around that cash?  In certain situations, there is a resource, sometimes two people, within the school that has to manage that cash which is taking their time away from other responsibilities of greater value. There is additional work involved in reconciling the cash.  So we have witnessed the costs of holding, securing, reconciling and depositing cash to be a significant drain of resources for organizations.  This is a key driver why schools are moving toward online and other channels, so the cash does not have to be maintained in the school building.

An additional cost may be the cost of depositing the cash.  We have seen an increase in bank branches that charge for accepting large amounts of cash.

The challenge of course is for schools to move toward electronic channel while still accommodating parents who find cash payments to be most convenient. These parents pay their other bills such as gas and electric with cash at kiosks or convenience stores because that is most convenient for them.

CW: What would you want to impart to parents and schools as they contemplate moving away from cash based payments? 

WB: Through my work dealing with companies across the country, I have seen that trust and convenience are the two most important factors.  If the consumer is going to deviate from a convenient channel to another, there must be a significant trust factor in place.  How is this process working?  What sort of verification do I receive at the end of the sale? Can I trust that that transaction is taking place if I need to validate it?  What are the controls that are put in place?  Once they have those questions resolved then moving to another behavior and changing channels is easier.

We are living in an environment in which things are changing, the industry is changing and we as consumers cannot move forward by looking in the rearview mirror.  What has worked for us as a consumer, regardless of whether we are banked or unbanked will not necessarily work for us in the future.  I think that is the important aspect that the consumer needs to really start thinking about – how are things changing and how should I be a part of this change that are going to give me the convenience and empowerment that I need?  That question must be asked.

CW: If you were a school principal or school finance officer what would you be considering about accepting cash in your schools? 

WB: We do know that schools deal with cash and one of the things that if I were the principal I would want to know is as a principal identifying and controlling the risk and the fraud that is involved [with accepting cash in schools]?  If for any reason, cash is removed unbenounced to any of the employees in the school that makes me responsible, as the principal.  

The ClassWallet solution is a way to mitigate and reduce that risk by moving the transaction through another channel.  It is taking the risk out of the school and putting it where there are better controls in place.  I think that would be a smart approach because at the end of the day the focus of the principal is to educate the students to the highest form possible and not necessarily have to control the cash that comes in.

And we know that there are certain times in the year where the cash [intake] in the school is high.  School fees, club fees and other times of year when the cash is high as opposed to other times so why take that control and take that risk?  That is where I think that the ClassWallet solution would be of value to me as a principal because if any cash is removed or lost that is putting a pain on the school as well as the students and the parents and who is going to recover that and who is responsible for that?  That’s not where you want to be.


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About The Walker Group

The Walker Group is a boutique management consulting company and we focus our attention with Fintech and financial payment technology companies that want to partner with banks.  Banks outsource many of their payment capabilities to third parties service providers and the Walker Group is the bridge between these payment technologies companies and banks.  For the last thirteen years, the Walker Group has also have worked to assist banks to help the unbanked consumer.