By Cecilia Crosby,
contributing writer
This article originally published in Self-Service World magazine, May/Jun 2006.
Today's economically and ethnically diverse culture is changing the way companies conduct their business. Traditional business practices, particularly in the financial realm, and the concept of brand loyalty have fallen by the wayside as customers now have more options and an ever-stronger voice in shaping the products offered to them.
And yet, despite Herculean efforts at meeting the needs of today's diverse consumer base, one aspect of business has remained static for a majority of companies — how they handle billing and accounts receivable. In this area, the traditional approach still holds fast: The company sends out a bill in an envelope and waits for payment to be remitted in the same fashion. In some cases, companies offer the option of making a payment online, but this option, as does the other, assumes that the consumer has a credit card or bank account.
For a growing number of people in the United States, paying bills is not simply a matter of writing a check and dropping it in the mail. The unbanked — or cash-preferred — market, made up largely of low-income families, eschews traditional financial institutions for a variety of reasons, from a lack of trust in the institutions to a lack of sufficient funds to maintain an account.
According to the Center for Financial Services Innovation, "In the United States today, as many as 22 million households are unbanked." The Retail Financial Services Initiative (RFSI), a study organized by the National Community Investment Fund, places the combined market of unbanked and sub-prime borrowers between 30 million and 40 million.
Cash-preferred customers have traditionally had to rely on outlets such as check-cashing stores, payday lenders and pawn shops to serve their cash-based needs. While these types of stores provide a needed service, they can be intimidating for some consumers. As with in-person payments locations, there is little privacy. Customers are required to give personal information to a clerk or explain why they are late paying a bill — all in an open lobby where others can overhear private information.
The cash-preferred market represents an untapped market segment for many companies. But for these companies to capitalize on this growth opportunity, they are going to have to look for options that will allow them to accommodate these consumers' preference for dealing in cash.
One option is a bill-pay kiosk that allows customers to access a number of accounts from different service providers, such as cable, utilities and mobile phones, and make payments in a variety of modalities.
Bill-pay kiosks have emerged in recent years as a vehicle for service providers to reach the cash-preferred market. In order to serve customers across a broad market base, service providers have to provide a source for those customers who wish to pay their bills in person. But typically in-person payments are burdensome for companies — both in terms of financial costs and labor.
Bill-pay kiosks provide a new way to collect payments and offer the benefit of serving both the cash-preferred and banked consumer markets. These standalone devices, which are located in biller places of business and convenience stores, are easily accessible to all consumer segments — not just the cash-preferred.
This story was excerpted from a guide on bill-payment technology, produced jointly by Self-Service World and Tio Networks.
