This excerpt of the ATM Marketplace special report, Expanding beyond the ATM: Bill pay kiosks reach new markets, appeared in Self-Service World magazine's special section, FOCUS: Retail Self-Service, January 2007.
As ATM competition increases and surcharge fees decrease or go away altogether, retailers such as Circle K and ExxonMobile are exploring markets that will augment their ATM programs and increase revenue and traffic flow into their locations.
Although some retailers will consider hybrid or multifunctional ATMs for this purpose, the challenges of competition and the lack of revenue that face the standard ATM market are likely to reappear in these markets as well.
Independent sales organizations (ISOs) and retailers must cast their nets wider when searching for additional revenue streams, then.
One emerging technology to help them is self-service bill-payment kiosks. Just as ATMs became popular largely because of the convenience they offered, bill-payment kiosks offer similar convenience but also have the benefit of reaching a growing unbanked consumer base that the ATM industry is just starting to tap.
Getting on board with bill payment
Bill-payment kiosks have emerged in recent years as a vehicle for service providers to reach the cash-preferred or unbanked population, estimated to be 22 million in the United States. To serve customers across a broad market base, service providers such as retailers, utility companies and government agencies have to offer a way for customers to pay their bills in person. But in-person payments typically are burdensome for companies, both in terms of financial costs and labor.
Bill payment kiosks provide a new way to collect payments and offer the benefit of serving both the banked and the cash-preferred consumer markets. These standalone devices, which are located in the biller's place of business and in convenience stores, are easily accessible to all consumer segments.
Bill-payment kiosks, such as those that are part of the TIO Network, offer a more lucrative opportunity for some retailers than do ATMs. Each kiosk pay station can support eight to 10 billers, which in turn become eight to 10 revenue streams for the retailer or ISO.
The kiosks aren't limited to bill payment. Retailers can choose to move some of their products, such as money orders, check cashing and prepaid items, to the kiosk to alleviate stress at the check-out counter. These automated services, which impose a customer fee, also generate revenue.
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"ISOs don't want to move away from ATMs. What they really want is an ATM that does more things," said Hamed Shahbazi, chairman and chief executive officer of TIO Networks Corp. "The core application of cash dispensing isn't as profitable as it used to be. We've demonstrated that we can generate revenue through cash acceptance."
In April, TIO signed a deal with Nashville Electric Service to place 20 bill-payment kiosks in ExxonMobile Tigermarket and On the Run convenience stores in the Nashville, Tenn., region. And in October, the company signed a deal to deploy more than 100 of TIO's E-Wiz financial services kiosks at c-store locations throughout Texas.
Unlike ATMs, which cater only to those who have bank accounts, bill-payment kiosks cater to everyone who has a bill to pay. The concept is especially appealing to the growing population of underbanked consumers who are willing to pay a small fee for the convenience of settling their bills at an easily accessible and user-friendly pay-station.
