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Most adults above a certain age will remember bringing lunch money to school. Sometimes that money was lost, sometimes it was stolen by bullies, and often it was just spent on junk food unbeknownst to parents.

Yet when my daughter enrolled in kindergarten last year, we were informed that Denver Public Schools utilized the My Lunch Money program to accept payment for her meals. This program offers parents and students several advantages. Obviously, it eliminates the problem of lost or stolen money while assuring parents that their funds were used for their intended purpose. Furthermore, parents can now pay for their children’s school lunches with their credit cards.

It turns out that there are many companies that are getting into the business of accepting payments on behalf of schools. Competitors include Send Money To My School and My Payments Plus. In some cases, parents can even review what foods their child ordered. So will credit cards replace lunch money? And should they?

Is this a good idea?

Like any credit card transaction, paying for school lunches carries the potential for both costs and rewards. Parents who carry a balance on their credit cards will be incurring interest on these charges from the day they are posted. In addition, charges are processed in advance so that the student has money “on account” with the school, potentially adding to interest charges.

Yet for parents who pay their balances in full and on time each month, this is just another expense that can be used to earn more credit card rewards.

Do parents have a choice?

My Payments Plus allows parents to fund accounts with a check or money order, while My Lunch Money says that parents must fund their child’s account using a credit or debit card. It is clear that schools have a lot to gain from using these automated systems instead of cash, and parents that want to avoid debt and interest charges should use checks or debit cards.

Where is this going?

As all parents learn when their children enter school, even a publicly funded education is not free. Schools charge a wide range of fees for field trips, activities, and supplies. In addition, parents are often expected to make donations for parties and other special events. So it should come as no surprise that Heartland Payment Systems, the company behind My Lunch Money, also offers similar products for paying school fees, purchasing student supplies, and making donations.

Credit cards have been with us for decades, but it is only recently that private industry has teamed up with schools to offer these innovative services. Parents can now use these systems to pay for their children’s meals, but the technology does not yet exist to make kids eat their vegetables.

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