This almost makes it sound like the card keeps a log of where it is used internally. If that is the case then it could be used to track off campus activity, as a lot of colleges let you link your student ID so that it can be used as a debit card (mine did). The article is kinda vague though, so who knows.

If it is the case that it's tracking all purchases, I hope it's optional or at least that students are properly informed because that's kinda creepy.

Also since it's ID cards: when swiped the machine would be communicating back to a central server to get balance (and thus tracking) OR they're pulling it off of the card's state at the machines directly, then writing to the card where it was used and then pulling all that data when they recharge the cards. 3rd potential option being reading each machine that interacted with the cards and collating but I see that as less likely, given the wording of the article.

Any way you look at it: it's something credit card companies already do.