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 c ell 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?

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Mark Hill: MasterCard RPPS

Marta:

When I was the President of PayCenters the financial kiosk company, I looked into working with both CheckFree and credit card processors as an alternative to an aggregator. The problems were the expense of CheckFree at that time and the latency of the payment. I’ll explain further.

In the PayCenters business model, transaction fees needed cost effective for my customer base, and CheckFree was very expensive in a commercial setting. Also, time was of the essence for our unbanked communities of interest. It was imperative that the bills were processed as quickly as possible. Credit Card Processor originated settlement can take 14 days or more.

As you know, most of our customers paid with cash, and usually when the bill was due, so getting the amount posted quickly, often 3 to 4 business days or less was paramount.

MasterCard is a great way to get funds in through a credit card processor, and affords your company a number of opportunities to get an application up and running very quickly as XML .Net are part of the integration model. The problem I had was that you had little or no control of when the electronic payment would arrive at the merchants’ bank, and audit records were often deleted or hard to find to reconcile the amounts by the customer account number.

This process was called an unauthorized biller/agent relationship. What this means, is that the merchant you are receiving a payment on behalf of, has not authorized you to receive their bills and some go to great lengths to make sure your customers are not afforded any consideration should a bill arrive late.

I recall an “un-named” electric company in the Stockton, California area going out of their way to not help a customer that used one of our bill payment kiosks. We eventually removed the “un-named” electric company from our selection list, which created an uproar in our customer base for that part of the country.

Most of our customers were not in a position to pay a reconnect charge, because they were late – in my opinion, because the “un-named” electric company would not help reconcile the payment with the account – even when we added the account number to the e-Payment.

I have my own opinion on why a merchant would bilk their customer base, as a public utility company, but that is another blog.

So the long answer to your question is yes credit card processors are a great tool for a business to incorporate into the A/R applications, but as you receive more bills, a fully vetted processing model with enhanced features will help eliminate a number of obstacles while improving the customer experience.

1

March 06, 2008

Marta: I used to use Checkfree

I remember a hundred years ago, that southwetern bell had a pilot so that you could pay your telephone bill using checkfree - it wasn't free.

This was before all of the ecommerce stuff started really catching on -

My company processes our bills through another our credit card processor for aorund $0.03 a transaction, according to our CFO - we do not charge our customers for the service, as it helps us receive our money faster and creates good will.

What do you know about credit card bill payments?

2

March 06, 2008

Mark Hill: Hope this helps

AS Wells & Brendon:

Yes, absolutely, I can help you with any of your electronic commerce, business or kiosk requirements, as well as other needs you may have.

Thank you for the opportunity to provide a shameless plug for Chill Services...The check is in the mail

I agree, there have been a number of companies in the past that had given the kiosk industry as a whole a bad name. Fortunately, a few bad apples don't have to spoil the whole bunch, as the Jackson 5 once said.

To start - the Kiosk Industry started a convergence of sorts several years back to address this and many other issues and are now making great strides in furrowing out the "bad apples" that have created an up roar, misrepresented their service offering, and perpetuated a bad name for an otherwise well intending business group. To address this issue, a number of companies participate in one of many industry groups that bring together a number of complimentary companies & services, such as mine...

You can learn more "Ad Moment" by sending me an inquiry, and I would be more than happy to help, or if you are curios to find out more about the industry as a whole, you can research the following links:

www.kioskmarketplace.com

www.selfservice.org/

www.atmia.com/


Either way, I think that electronic commerce on any number of form factors is still in its’ infancy, and great things are on the horizon – take a look at idesta.com …


March 6, 2008

As a follow on to this thread

I was just sent this notice for those that are interested.


It's not too late to attend The Digital Signage Show and KioskCom Self Service Expo, April 16-17, 2008 at Mandalay Bay in Las Vegas. Register by tomorrow and save $400! Don't miss your opportunity to attend 2 shows' worth of conference sessions and technology discussions tackling what's now and what's to come in customer- and employee-facing technology.

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Your full conference badge allows you access to conference sessions at both KioskCom Self Service Expo and The Digital Signage Show covering issues such as deployment strategies, customer acceptance, best practices, budgeting, compliance, the impact of wireless and more! All conference sessions are conducted in a truly interactive way with plenty of time allotted for your pressing questions and answers.

Session topics include:
Learning from Experience: Discover What You Don't Know from Others' Mistakes
Defining Success Criteria for Digital Signage Deployments - Pilot to Rollout
How to Avoid the 5 Most Common Oversights in Self-Service
Calculating Your Metrics
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Network and mingle with thousands of your peers at special luncheons and receptions in the Exhibit Hall each day and visit over 300 exhibits featuring the latest in products and services to maximize your interactive digital media initiatives.

Find complete event information and register at www.selfserviceexpo.com or www.thedigitalsignageshow.com.

Remember, early registration pricing ends tomorrow, Friday, March 7, 2008 at 5pm EST. Contact us at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it or 203-371-6322 with any questions. We look forward to seeing you in Las Vegas!

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3

March 04, 2008

A S Wells: Beware of TV rip offs.

I'd like more information about the kiosk industry as well - I know that some of those groups that sold fully functioning kiosk on late night TV were a rip off, but I've seen some pretty slick stuff in the malls - Do you do anything like that?

4

March 04, 2008

Brendon Addame: Company

I just sent you my contact information - I would like to learn more about the kiosk you described in your earlier blogs as well as this type - I see you are fairly well versed in the industry - can you tell me where I can learn more?

Thanks

Brendon

5

March 04, 2008

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