With the innovation of eCommerce in various local municipalities as a service to the unbanked or under banked, auto-payment services through merchants with their customers that have bank accounts, billing beinf either pre-paid, or billed to your cell phone each month, as well as banks trying to regain eCommerce market share with an under banked communities of interest, why are kiosk application not more readily available to the unbanked?

This April, 2008, El Paso Electric customers can start paying their electric bills in Circle K stores for $2.00 a transaction using the TIO, Self-Service Kiosk application and equipment.

It was not referenced, but it can be inferred, that if a bill payment transaction cost TIO $0.10 or less to send to an aggregator or bill payment consolidator, like Fiserv or Online Resources Corporation (ORCC), formerly known as Princeton eCom, and there is most likely some revenue share split amongst the 3 companies. This is a great concept for other retailers.

Interestingly enough, a bill payment kiosk with the entire needed periphery can sell for around $3,000 - $4,000.

After adding in things like check 21 capabilities and cash pick on a daily, bi-weekly, or even weekly basis, you are not increasing your cost model by significant margins. So why are there not more retail locations adding their own bill payment capabilities for free, and charging fees to other merchants for allowing their customers to pay their bills electronically, to help defray expenses?

The economics are certainly there. Assume TIO receives $0.90 of the available $1.90 available after deducting the transaction fees and the retailers split the $0.50 each. Assuming 10 - 15% of their customers base, possibly higher in El Paso are unbanked, you are looking at a huge monthly revenue stream each month.

I expect that the cost savings to El Paso Electric for having an automated process for receiving bill payments is cheaper than having a dedicated clerk process the payment, and the other benefits most certainly outweighs the revenue stream they may get, so it would be counterproductive for El Paso to charge their customers to pay their bills, even though it is an industry acceptable policy to do so.

Think electronic bill payments at your bank - or better yet, CheckFree at $0.41 per bill.

Kerry Lore, vice president of administration for El Paso Electric indicated that they serve more than 351,000 customers in West Texas and southern New Mexico. Using the 10% rule, which is also applicable to the unbanked, as a basis point, 35,000 customers would be the target market for this application.

If you assume that 3,500 customer would use the kiosk, your sunk cost is $4,000 for the kiosk and the monthly recurring expense is $1,500 - $2,000, you would break even after 14 months, using the CheckFree model, much sooner if you use a reasonable transaction fee, like $1.00. Even faster using the TIO model, so having 10 available kiosk in key locations would recover very quickly. Not mention the good will factor.

So why aren't more retail locations going directly to companies like Fiserv or ORCC?

I'd be interested in your take?