At the Mustang Central Middle School cafeteria, students pay $3.75 for lunch. To fill their lunch accounts with money electronically, parents pay a $3.25 fee, nearly as much as a meal, each time they make a deposit.

To manage its lunch accounts, the district partnered with MySchoolBucks, a growing division of financial services heavyweight Global Payments. Other common payment processors are SchoolCafé and LINQ Connect. Sending lunch money through these platforms is easy and convenient.

But those seemingly innocuous fees can really add up.

Parents collectively pay $100 million in fees each year, a couple of bucks at a time, while school districts do little to mitigate. Families on reduced-price lunches, earning less than $32,000 per year for a family of four, pay as much as 60 cents in fees for every $1 spent on lunch, regulators said.

Even a $3 fee on a $30 deposit, enough to buy eight lunches, is a 10% surcharge, three to four times more than typical credit card processing fees.

From North Carolina to Maryland, legislators have ordered more transparency with itemized charges for reasonable fees associated with processing orders. But in comparison to similar deposit services, such as Venmo, or typical credit card processing fees that range between 1.5% and 3.5%, the fees associated with online lunch payments make up a much higher ratio.

Oklahoma Watch surveyed two dozen districts and found fees ranging from $2.25 to $3.25 per transaction.

Miguel Montufar uses MySchoolBucks to deposit lunch money for his two children in Mustang schools, typically adding $30 to $50 every two weeks when he gets paid. Each time, MySchoolBucks tacks on a fee. His receipts show he’s paid nearly $200 in fees since 2014.

“It’s one of those things you really don’t think about until somebody brings it up and you’re like, ‘Well, you know what? I am paying a lot of fees,’” Montufar said.

School districts across the country are increasingly partnering with payment processing companies to give families a way to pay online for school expenses, mostly cafeteria meals and à la carte items such as bottled water and ice cream.

MySchoolBucks dominates the market, but at least 20 companies facilitate electronic payments between families and their schools.

The fees to add money to a student’s school lunch account collectively cost U.S. families upwards of $100 million per year, according to a 2024 report by the Consumer Financial Protection Bureau.

Schools said the service is optional and offered only as a convenience. Parents can still deposit money, without a fee, using cash or a check. But parents, like Montufar, said that’s getting more difficult.

“We’re coming into the digital age,” he said. “I mean, who has cash?”

The fees disproportionately burden low-income families, who can’t afford to make larger deposits and must pay more frequent flat transaction fees.

A parent who deposits every other week is likely to pay more than $50 in fees in a school year. But even parents who can send $100 at a time, the maximum deposit in some cases, will pay at least $15 if their child eats at school regularly.

Parents are paying what are essentially junk fees: unexpected, sometimes hidden charges for a service that costs a company little or nothing to provide. In this case, they’re paying to pay, said Adam Rust, director of financial services at the Consumer Federation of America, a non-profit consumer advocacy organization.

“There’s no place for school junk fees,” Rust said. “Period.”

On June 23, millions of parents across the country can expect to receive a settlement notice in a class action lawsuit against MySchool-Bucks over its fees. The company agreed to pay more than $18 million, pocket change for a division of Global Payments (NYSE:GPN) whose revenue topped $10 billion in 2024.

Meanwhile, for at least some schools, MySchoolBucks increased its fees in 2024 to $3.25 for credit or debit card payments and $2.75 for electronic checks. Parent company Heartland School Solutions President Jeremy Loch, in a letter to districts, cited rising payment processing interchange fees and increases in operational costs as the reason for the increase.

Heartland School Solutions didn’t respond to our request for an interview. In its response to the lawsuit, Heartland said it collects a program fee with each online transaction to cover the costs of operating MySchoolBucks and turn a reasonable profit.

In a span of six years, 2013 to 2019, parents paid MySchoolBucks an estimated $192 million in fees, a figure made public in the class action lawsuit despite the company’s unsuccessful attempt to keep it under seal.

Less than one-third of that revenue, on average, went toward credit card interchange fees, the company also revealed in court documents.

The Florida dad who sued, Max Story, alleged the company had duped parents into paying excessive fees in part by insinuating the schools were collecting the fees.

More than 2 million families with students in 30,000 schools use MySchoolBucks. Last year, Global Payments told investors MySchoolBucks is in the country’s three largest school districts, including Los Angeles. Chief Executive Officer Jeff Sloan described, during a 2020 earnings call, that two-thirds of their revenue in the education sector comes from K-12 payments.

Collecting fees from families is not the only way companies like MySchoolBucks profit. Some school districts pay directly for the use of the software; that’s the other third of their revenue, Sloan said.

And they can generate even more while holding the pile of money parents deposited.

Before school districts bill them, the companies can invest the deposits and earn interest, said Sue Lynn Gasser, professor emeritus at the University of Central Oklahoma’s department of economics.

“All those kids going through the lunchline, they could make quite a bit of money on the interest,” Sasser said.

An estimated 315,810 U.S. students on reduced lunch pay between $1.9 million and $10.2 million in transaction fees each year, according to the Consumer Finance Protection Bureau. And an estimated 2.4 million paying full price for lunch paid between $28 million and $92 million in fees.

To read the rest of this story, visit okwatch.org.