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Schools are demanding a payment provider which has ceased operating in the UK refund their parents in full amid accusations that cash is being 鈥渨ithheld鈥�.

provided parents with an online account where funds could be uploaded to pay for school dinners and trips 鈥� but shut up shop last Friday. Around 600 schools used it.

However, the firm will only refund parents for balances over 拢10, and those wanting to withdraw their cash must pay a 拢10 鈥渁dministration fee鈥�.

Rob Pointen, CEO of Weduc which had partnered with sQuid, said the decision to deny parents refunds appeared 鈥渨holly unjustifiable鈥� in an email he sent to the firm.

鈥淧arents deposited their money in good faith, and it is wholly unacceptable for them to be penalised simply because your company is shutting down,鈥� he wrote in a letter to sQuid鈥檚 CEO last Friday.

鈥業t鈥檚 just very wrong鈥�

While parents tend to keep small amounts on sQuid accounts, schools said it can add up. One trust claimed sQuid currently holds about 拢43,000 deposited by parents at its schools. Others said the firm was holding between 拢5,000 and 拢8,000.

鈥淭hat money means a lot to some of our parents,鈥� Harj Oghra, CFO at Dormers Wells Learning Trust, which serves a deprived area of London, said.

鈥淭hree or four pounds for a family that鈥檚 struggling to pay rent or pay bills 鈥� That buys a lot for their child at breaktime,鈥� she said. 鈥淚t is just very wrong.鈥�

Anne Marie Bray, business manager at Clive CoE Primary School in Shropshire, said: 鈥淲hen families are struggling, it鈥檚 even more vital, but actually they have an obligation to refund everybody.

鈥淥therwise, they鈥檙e making a massive profit from something that was beyond our control.鈥�

Schools said they were also frustrated that sQuid had left them with just five weeks to find a new provider, with some still in the process of transferring, according to Pointen.

鈥淚f [sQuid] had given us three months, we could have avoided any of the anxiety for schools and parents,鈥� he added.

Adam Smith, sQuid鈥檚 CEO, said it had closed UK operations 鈥渂ecause of increasingly adverse trading conditions during and post-Covid which have made the business unsustainable鈥�.

He said the company 鈥渉as been carrying out an orderly exit, leaving time for schools to find alternative providers while continuing to support services for schools and parents.”

He added: 鈥淭he company has continued to provide a refund service. We are doing so in accordance with our terms and conditions. We understand if some schools are upset that we are making charges.鈥�

Moving the goalposts

The issue has been compounded as parents were told they could claim full refunds on their remaining balances before April 14. But schools say the firm enforced the 拢10 admin fee from as early as mid-March.

鈥淗ow can you charge an admin fee when you鈥檙e the one shutting down?鈥� Oghra added. 鈥淲e are helpless because it鈥檚 not our money.鈥�

Smith said there had been an 鈥渆lement of miscommunication鈥� in the company鈥檚 statement about the April 14 deadline. While sQuid had initially waived charges, it was now 鈥渋n a situation where we鈥檙e no longer able to do that鈥�.

He encouraged parents in deprived areas to contact sQuid to 鈥渞eview鈥� their refunds.

But schools have also complained about the time taken for their emails and calls to be answered since the firm shut.

Smith said he was 鈥渧ery, very surprised鈥� to hear that schools had had difficulty communicating. The company had 鈥渨orked very hard鈥� to maintain its customer service.

Parents encounter issues

Nathan Jeremiah, COO at Archway Learning Trust, said the firm took eight days to comply with the school鈥檚 request to completely disable the 鈥渁uto top-off鈥� function. Smith disputed this and said the function was turned off after four days.

But Jeremiah added some of his parents requesting refunds on balances above 拢100 had encountered issues, and was also critical of the firm removing the function allowing refund requests through their app. Instead, parents must log into their accounts on the firm鈥檚 website.

Across the trust, Jeremiah said sQuid currently holds credit balances totalling more than 拢40,000.

Smith said the large balance was 鈥渘ot the result of [sQuid鈥檚] failure鈥� and money was being returned 鈥渋n accordance with the terms and conditions鈥�.

鈥淚 am therefore not quite sure as to what the issue actually is,鈥� he added.

He said many schools had planned alternative arrangements 鈥渨ithout any issues at all鈥�.

But Dave Watts, school administrator at Clive CoE Primary School, said: 鈥淚t鈥檚 not something schools would choose to do halfway through the year. We鈥檝e had to move very, very quickly. It鈥檚 been quite a stressful time.鈥�