All of which brings us to Squid, a UK-based payments company that recently arrived under fire. The problem? Their £10 refund cancellation fee. Theed’s company was responsible for granting online accounts to between 180,000 and 200,000 children in primary and secondary schools throughout the UK. As of earlier this month, it stopped operating. When Squid—as well as competitor Read and others—announced in February that it would shutter these accounts, the company pointed to unsustainably low economic conditions as their justification for exiting the market.
Parents can only transfer money out of their Squid accounts once their balance hits at least £10. This is an undisclosed rule marked in small font within the company’s terms and conditions. Squid imposes a £10 administration fee for refunding stored value. This apparent bias is provoking righteous outrage from Mumsnet parents and commenters who are asking why they should pick up the tab on this policy’s inequity. In response to this backlash, Squid has stood its ground, claiming that these charges are in line with their terms and conditions.
Before Squid, the company worked in 600 schools across the UK, where it offered parents a much more convenient payment solution. Like many others, those accounts are already drained to zero since the services were terminated. Consequently, the overwhelming majority of users no longer have any money left. The company will not disclose the balance left in these accounts. They refuse to disclose how much revenue has been brought in by the refund fees.
Samantha McDonald Adam Smith, founder and CEO of Squid, has addressed the backlash by fired back at professors up in arms over Squid’s business model.
“We run a business and we have costs. We are leaving the market because we cannot make money. We are unsustainable and we’re having … a very orderly exit.” – Adam Smith, founder and CEO of Squid.
Squid has exited the K-12 payments space. Through active provision of payment technology to humanitarian organizations working throughout Africa, it stays alive. Policy and economic drivers rendered the school payments industry untenable. In light of that decision, the company chose to exit that line of business.