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Money-transfer kiosks could send billions around the world

Kiosk Marketplace surveys the money-transfer and remittance industry's self-service and kiosk landscape.

May 19, 2014

Global money-transfer service firm MoneyGram thinks the global market for money transfers at kiosks will rapidly become a multibillion dollar opportunity for remittance service providers. "We believe that billions of dollars will be transferred worldwide via money-transfer kiosks," Alex Hoffmann, MoneyGram’s executive vice president, global product management and emerging channels, told Kiosk Marketplace.

MoneyGram is pursuing a major initiative in kiosks as part of its strategy to increase its self-service money-transfer business, Hoffmann said.

In February, Pamela Patsley, MoneyGram’s chairman and CEO, announced that the company plans to increase the revenues it generates from self-service money transfers from 6 percent of total money-transfer revenues in the year to Dec. 31, 2013, to 15-20 percent of money transfer revenues in fiscal 2017.

MoneyGram offers three self-service channels: the Web, mobile devices and kiosks, as well as a facility for people to send money direct to recipients’ bank accounts. “We define direct-to-bank account transfers as self-service, even if the money is sent via MoneyGram agents, as this means recipients don’t need to get their funds from agents,” Hoffmann said.

MoneyGram has found that a higher percentage of kiosk customers than branch users send money direct to recipients’ bank accounts. “Customers who use kiosks to send money to Latin America from the U.S. tend to transfer money direct to bank accounts in Latin America,” Hoffmann said. “We find that offering kiosks is a way for us to win new types of customers who wouldn’t use branches.”

Depending on regulations and consumer preferences in individual markets, MoneyGram may allow card payments at its money transfer kiosks as well as cash acceptance, Hoffmann said.

Three models

MoneyGram offers a look into different options in the industry model. It operates thousands of kiosks on several continents, and has three different kiosk service models.

Firstly, in a number of markets MoneyGram offers full-service kiosks in retail locations, where the entire money transfer transaction, including sending and receiving, takes place on a kiosk.

Secondly, MoneyGram operates what it calls "staging kiosks," in which the machine acts as a staging unit for both senders to set up money transfers and recipients to collect their funds – but the money is actually handled by an agent.

The money transfer kiosks which MoneyGram operates with 7-Eleven Australia are staging kiosks, Hoffmann said.

Staging money transfer transactions at kiosks lightens the workload for retail staff, and means that retailers can deploy cheaper kiosks. “This is because staging kiosks don’t need to have the security hardening required for kiosks and ATMs that handle and store money,” Hoffmann said. “It’s also cheaper to maintain and service a staging kiosk than a full-service kiosk, as it doesn’t have any moving parts.”

MoneyGram’s third model involves a third-party operating its own kiosks and integrating a MoneyGram API so their kiosks can offer money transfers. “One example of this is Saudi Arabia’s National Commercial Bank, which lets customers send money from its ATMs via MoneyGram,” Hoffmann said. “Instead of clogging its bank branches with thousands of people wanting to send money, NCB directs them to its ATMs. The customer has to register and carry out identity verification with an NCB teller. They then get a password that they can use at NCB's ATMs."

Mobile staging

“Mobile staging, where customers set up a money transfer on a mobile phone, then complete the transaction with an agent, is still at the early adopter stage,” Hoffmann said. “But staging kiosks are a mature technology, and are used by a large number of customers.”

Hoffmann doesn’t see the need for pre-staging a kiosk transfer on a mobile device. “If you have access to a full-service kiosk, there is no point setting up the transfer on a mobile,” he said. “I also think it would be cumbersome to pre-stage a kiosk transaction on a mobile phone. But there is a demand for senders and recipients of kiosk-initiated transfers to get SMS notifications on mobile devices.”

But, Yasuhiro Sakamoto, Western Union’s country director for Japan, said, "mobile is without doubt the next big opportunity in the world of money transfers and payments services." Western Union offers mobile services in 18 countries, including the Philippines and Nigeria.

"Where mobile-kiosk integration makes sense, we will certainly look into it," Sakamoto said.

Western Union

Western Union offers money transfers at 100,000 ATMs worldwide, as well as at self-service cash-only kiosks in a number of markets.

“We’re always looking for suitable opportunities to grow our network of kiosks and self-service offerings,” Sakamoto said. “We see the deployment of kiosks as a small but key part of our overall channel mix. As consumers have learned about the convenience of self-service kiosks, we’ve seen continual and steady growth in kiosk-based transactions in markets such as Japan.”

Western Union provides money transfers at the 19,000 ATMs operated by Seven Bank at Japanese 7-Eleven convenience stores, and also offers cash-to-cash international money-transfer services at self-service kiosks in Japan with its agent, Densan System Co. Ltd., according to Sakamoto.

DSK processes money-transfer transactions at 10,000-plus FamiPort kiosks in FamilyMart convenience stores throughout Japan. “Our business model is based on being everywhere consumers need us to be,” Sakamoto said. “So, being able to tap into a widespread retail network such as FamilyMart is extremely valuable for consumers.”

ManGo

“In Russia and the [Commonwealth of Independent States], money-transfer kiosks are very popular with expatriate workers from the various CIS countries,” said Aliya Durdyyeva, CEO of Dubai-based First Mobile Wallet. “This gave us the idea to offer money transfers at First Mobile Wallet’s network of ManGo financial services kiosks in the UAE, where 80 percent of the population is expatriate.

After a year and a half of discussions, First Mobile Wallet has signed a partnership with a money-transfer operator, and is working on a technical integration with their system, Durdyyeva said. “We’re planning to launch the money transfer service in the second quarter of 2014 in the UAE,” she said.

The ManGo kiosks, which already provide the ability for customers to pay local and international bills, will only provide a money-send capability. “We might introduce a pay-out capability later on, but this would require a cash dispenser unit to be fitted to the ManGo kiosks,” Durdyyeva said. “We’re also looking at offering card payments at our kiosks. But we’re not sure this will be as popular as cash payments, as kiosk users in the UAE tend not to have cards.”

Customers wanting to send money from ManGo kiosks will be required to register and carry out verification with one of First Mobile Wallet’s local partners, Durdyyeva said.

GWD Media

Sheffield, U.K.-based kiosk software vendor GWD Media has developed Genkiosk software which enables kiosk operators to provide money transfers at their machines. Genkiosk supports both money-sending and pay-outs, although currently GWD Media doesn’t have any clients offering pay-outs at kiosks. The software also supports ID scanning via OCR.

“We have a client in Dubai which runs a large number of money transfer kiosks using Genkiosk,” said Ben Widdows, a director at GWD Media. “We’re about to launch money transfer kiosks in the Philippines with a new client, who owns 1,000 stores in the Philippines.”

Widdows said that the Dubai money-transfer client, whose money-transfer service is provided by The UAE Exchange, offers different types of services at different locations. “For example, some of its kiosks only offer money transfers, and others offer bill-pay and mobile phone top-up as well as money transfers,” he said. “Our money-transfer client in the Philippines will offer money transfers, as well as bill-pay and mobile phone top-up. The Philippines client will start with a small number of money-transfer kiosks before expanding its rollout.”

The Dubai kiosks just offer money-sending, not pay-outs, Widdows said. “The main reason is the cost of the hardware,” he said. “It isn’t expensive to install cash acceptance hardware, but the cost of the cash-recycling hardware needed for pay-outs is 10 times the cost of the cash acceptance hardware.”

GWD Media has found that demand for bill-payment kiosks is larger than for money-transfer kiosks. “The challenge for companies wanting to provide money transfers at kiosks is that the regulatory requirements for self-service kiosk money transfer transactions are prohibitive,” Widdows said.

Money-transfer kiosk operators either have to integrate ID scanning into their kiosks or limit the use of the kiosks to registered customers who have already gone through ID verification with an agent, Widdows said.

"The ID technologies used in kiosks have to be tailored to different markets,” Hoffmann said. “Each market has its own regulations for [know-your-customer verification] and [anti-money laundering] for money transfer services."

Cover image via YouTube.

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