Scots councils pay price for school lunch online payment system

Scottish councils are paying out hundreds of thousands of pounds a year in payments to technology companies which process parents’ online payments for school expenses such as lunches.

Pupils eating school meals and talking
Pupils eating school meals and talking

At least 26 of 32 local authorities in Scotland use software systems such as ParentPay and iPay to facilitate online payments for school meals, trips and other paid-for activities or practical classes such as home economics.

Instead of paying in cash, leaving teachers and office staff to process individual payments, the websites allow families to pay directly using bank transfers. However, schools are charged transaction fees of up to 1.3 per cent on each payment.

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According to information obtained by Scotland on Sunday under Freedom of Information legislation, 18 local authority areas paid a total of £385,505, with the total annual cost of transactions ranging from £1,972 in West Dunbartonshire to more than £100,000 in Renfrewshire.

Only one council – Aberdeen City – failed to provide the information. Ten others stated that they did use an online payment system, but said they could or would not provide details of the amount paid to the software company. Three councils – Glasgow City, North Lanarkshire and West Lothian – said they did not use such a system.

Renfrewshire Council paid out more than £102,000 to ParentPay in the last school year, although it insisted £97,742 of the total was costs relating to setting up the system and rolling it out. Neighbouring East Renfrewshire forked out £48,235, East Ayrshire paid more than £35,000, and Scottish Borders paid £36,129.

Local authorities say the system makes it easier for parents to pay their expenses, resulting in fewer outstanding bills.

Midlothian Council – which spent £11,623 on ParentPay transaction fees – said: “The commission paid to ParentPay is more than offset by the reduction in staff time and resources (printing of letters etc) involved in managing trips, events and other chargeable activities.”

According to the Scottish Government’s Scotland Excel procurement group, which six years ago developed an “Online School Payments framework” to help schools move payments online, Scotland’s local authority schools collect more than £120 million a year for school meals, trips and other purchases such as uniforms and transport.

For schools, local authorities, caterers and other school service providers, the cost of processing cash and cheque transactions is estimated to be 4.5 per cent – more than three times the fee charged by online providers.

Jamie Greene, Scottish Conservative education spokesman, said: “While the convenience of these systems is understandable budgets the high cost of this appears to undermine its benefit – something public procurement should have taken account of.”

In some areas, the local authorities also pay licence fees to the service provider.

In Inverclyde, fees on any discretionary activities paid for through an online system, such as trips, shows and school proms, are added to the cost and passed on to parents. They total £7,786.

Moray said it had paid £8,167 over the last academic year, with the majority coming directly from the local authority’s budget. The remaining £711 was paid by individual school budgets.

While some schools pass part of the cost of the transaction on to parents, others fund the costs out of their budgets and others are paid directly by the local authority’s own funds.

Some councils said they were unable to provide a figure as the transaction fees were paid to banks rather than the payment companies.

Edinburgh Council refused to supply the information, on the grounds that it has a “fixed price provision from its outsourced IT provider”. It does use ParentPay for transactions including school lunches and trips.

Renfrewshire Council did not respond to requests for comment.

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