April 12, 2004

Bill Pay Kiosks

ATM/kiosk helps customers pay bills with 'Ease'

Zipping payments across cyberspace is gaining wider consumer acceptance.

In fact, the Federal Reserve estimates that households banking by computer grew fivefold between 1995-2001 and three-fold between 1999-2003, and the proportions using debit cards and smart cards more than doubled.

But what about the millions of Americans who have no Internet access and no banking affiliation? The Federal Reserve estimates that at least 28 percent of the U.S. population is underserved by financial institutions.

Who serves them?

Self-service connection

One company trying to fill that void is Pay-Ease Inc. Its "PayStation" ATM/kiosks, placed in ethnic neighborhoods in Chicago, allow customers to pay their bills to a variety of creditors using cash or check.

Plastic is accepted, but not required; only a bar-coded bill payment stub is required to make a payment through PayStation. Check payments are transformed into electronic checks, and the paper returned to customers.

Pay-Ease, based in Mount Prospect, Ill., has been deploying bill-payment self-service machines for the past two years. So far it has about a dozen of them located in Jewell's and Dominick's supermarkets in Chicago. Users pay up to $1.75 for each transaction.

"We target our machines exclusively for high-traffic destination necessity places such as supermarkets," said Wally Hanna, the company's vice president of participant services. "We pick places where our customers live and do business."

Jessica Ip of Boston-based Dove Consulting said studies have shown that stamp and coupon dispensing have not really caught on at ATMs, and the same holds true for bill payment.

"Those don't have a mass appeal," Ip said. "ATMs are still primarily cash dispensers."

However, she acknowledged that self-service machines such as those developed by Pay-Ease could become a "transitional" step for people trying to gain greater access to traditional financial services.

Plans for growth

Pay Ease hopes to roll out about 40 more PayStations in Chicago by the end of the second quarter. Within a year, it hopes to have deployed 300 to 500 nationwide.

Pay-Ease has contracted with several companies offering their customers the option of paying a bill via a self-service machine as opposed to paying at a manned payment station or by mail or online.

These subscribers include Commonwealth Edison electric company (ComEd), Peoples Energy gas company, MCI, Sprint, Dish Network, Verizon Wireless, and AT&T Residential.

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The PayStation bill payment kiosk also functions as an ATM.

ComEd is satisfied with Pay-Ease's service, said Rose May, the utility's program manager.

"The machines brought in 11,000 payments in 2003," May said. "That's comparatively small in our overall payment picture, but we do believe in providing that option to our customers."

Dean Scaros, Pay-Ease president and CEO, said his company stresses convenience, but is also strongly focused on cost-savings to subscribers such as ComEd.

"Mail and walk in payments cost utilities and providers from $3 to $5.50 to process," Scaros said. "Pay-Ease cuts these costs to almost zero."

Pay-Ease owns, operates and maintains their machines. But the company is looking to expand their network nationwide by selling or leasing PayStations to ISOs.

New opportunities

The window of opportunity has widened because of the pending Triple DES mandate that will require many ISOs to replace or upgrade their aging ATM fleets, Hanna said.

Pay-Ease's pitch to the ISOs is that they will be able to keep revenues from the ATM side, and share revenues with Pay-Ease on the bill payment side.

In addition to providing bill-payment services, the machines serve as full-service ATMs for customers with access to traditional banking services. PayStations also can be programmed to dispense coupons, tickets, parking permits, vehicle and license plate renewal stickers and other products.

Hanna said Pay-Ease is ready to roll out parking ticket kiosks for the city of Milwaukee, Wis. The versatility of the PayStation platform bodes well for the company's future growth, he said.

"We have a great deal of flexibility in the way we work with providers, sponsors or ISOs," Hanna said.

Tidel Technologies Inc. is one of Pay-Ease's ATM hardware suppliers.

"Pay-Ease has found a wonderful area of opportunity," said Mike Hudson, Tidel's executive vice president and chief operating officer. "They provide a value-added service by creating a bill-payment platform onto an ATM platform."

Pay-Ease is not the only player in the bill-payment sector.

InfoTouch Technologies Corp. has marshaled substantial resources into this arena, focusing largely on the convenience-food/gasoline station niche. 7-Eleven Corp. offers some bill-payment services through its Vcom system. In addition, Coinstar has trumpeted its bill-payment capabilities for utilities.

Hanna said he considers neither InfoTouch nor 7-Eleven to be head-to-head competitors. Pay-Ease is in talks with Coinstar to provide software and processing services for its bill-payment programs.

Pay-Ease is also in discussions with debit-card processors to expand bill-payment services in cities around the United States. Another strong growth opportunity is money transfers to Mexican and Central American partner locations.

The company's future is bright, Scaros said.

"The opportunities for self-service delivery of customer services by kiosk is limited only by the imagination," he said. "Pay-Ease intends to be a major participant in this revolution."

ATM/kiosk helps customers pay bills with 'Ease' | ATM Marketplace News (Mobile Version)

Posted by Craig at April 12, 2004 02:40 PM