The Risks of using Cash for Per Diems, and why Digital Banking is superior

why use a digital card for per diem payments instead of cash

For universities with dozens of sports teams, clinical research trials, traveling professors and more, managing these expenditures is a full-time job.

Specifically university athletic departments need a better solution for paying per diems. They typically either pay the team’s coach, or the athletes directly for their per diem expenses while traveling and other expenses they incur related to team activities. 

Some athletics departments use cash, team-wide prepaid cards, or bank transfer funds into the coach’s personal account for them to distribute (either through cash, Venmo, or other peer-to-peer payment apps). Although this system seems to work, it carries lots of risks and leaves much room for improvement. What are the risks and how can it be improved? Let me explain…

Risks of using cash and prepaid cards for per diems

No Expense Tracking

When a student athlete is handed cash or a prepaid card, there’s no way to know how they spend the money. For some universities, this is a compliance issue. There is no way to track that the students are not using university money to buy drugs, alcohol or gamble. The athletic department also cannot collect any data on how their student athletes spend. 

Easily Lost or Stolen

When cash is handed out, it’s easy to lose track of the loose bills and coins. It’s also easily stolen, making cash a very inconvenient option for the student athletes. If the whole team is sharing a card and it’s lost or stolen, suddenly the whole team is without money and all of those funds are lost. Cash and a singular card for a team are very insecure ways of dispersing money.

Transferring funds into the coach account is bad practice

Accounting issues for the Coach and the University

Having potentially thousands of dollars flowing from the university into personal accounts can lead to compliance issues for both sides. The transfers could be flagged as taxable income, jeopardize a coach’s credit rating, and ability to take out loans if the banks. It is also simply hard to track the cash flow between personal expenses and university funded expenses all within one account.


Lack of separation between the professional and personal

Like in any job, work should be at work, and your personal life should stay separate. When universities transfer money into the coach’s bank account to have him distribute the funds to students, there is a breach of privacy. It also exposes the students to the coach’s personal finances, whether it’s through Venmo, Zelle or other peer-to-peer payment apps. It should not be part of a coach’s job description to commingle their personal funds with work.


Open to fraud

When juggling funds between the university, a personal account, cash, and/or peer-to-peer payment apps, there is a lot of room for the system to be taken advantage of. Because it is a personal account, the university has no way to track how the funds are spent once they are transferred. 

A solution to the per diems for student athletes problem: Digital debit cards

Digital debit cards are a great way to dispense funds to athletes, professors or students for per diem expenses or stipends. Each recipient can be issued their own card, and load it onto their phone with Apple pay or Google wallet for easy spending. These cards can be refilled or frozen at any point by the administrator. Get rid of cash per diems or a team shared card; here are a few reasons why digital debit cards are a better solution.


Track student and coach expenses

When using a digital debit card provider, there is total transparency over where the university’s funds are spent. Digital receipts are automatically sent to the admin.

Also, with a digital debit card provider like Crowded, you can restrict certain merchants to stay compliant with university regulations. Prohibit alcohol stores or casinos on the Crowded Digital Debit Card.


Fraud & Theft Protection

With a digital debit card, each teammate is responsible for their own card. All purchases are trackable, and the card can be frozen if it’s compromised. Because the card lives on a smartphone, it’s much harder to lose or steal than loose cash or a card. Crowded’s digital debit cards are backed by Visa’s Fraud protection and Zero Liability Policy.

Crowded’s Platform for managing  Finances

Crowded is not just a digital debit card per diem provider, it’s a whole banking* platform designed to help manage finances for groups. With Crowded’s platform, a university could manage all of their sports teams and research departments under one roof, and easily dole out money to the coach or students. Each team’s funds would be easily accessible and trackable from the Crowded dashboard. 

Easy to Deploy

Crowded’s digital debit cards are easy to create in bulk and you can create as many as you want (at no additional cost). Administrators can group teammates by tags like “Seniors, Football, Team Captain” and assign standardized or specific amounts to those players. 


Redeem funds in a few clicks

If, for whatever reason, the administrator or the coach wants to rescind the money that they paid to an athlete, it takes less than 5 clicks to complete that process using Crowded. They can redeem any remaining money on the card, or only take back a certain amount.

If you are interested in learning more about Crowded’s solution for per diem payments, we’d love to hear from you.