Article

The taxman refundeth

Thanks to a partnership with InnoVentry, customers at some Jackson Hewitt offices will be able to visit kiosks and cash their tax refund checks on the spot.

April 4, 2002 by

Many tax preparation companies claim to offer "instant" refunds. But Jackson Hewitt Inc. will actually put money in some of its customers' hands through a partnership with InnoVentry Corp., a leading provider of check-cashing services.

InnoVentry is deploying 15 of its RPM cash management machines at Jackson Hewitt Tax Service offices in Texas, Florida, North Carolina, Louisiana, Virginia and Nevada. Customers at those locations can cash their checks at the InnoVentry kiosks, which also offer standard ATM functionality. They will remain in place through April.

Another 500 or so Jackson Hewitt offices in all regions where RPM machines are found will cooperate in a tax season marketing program, encouraging customers to cash their tax refund checks at RPM machines located at nearby retail stores.

Jennifer Cuthill, a product development manager at InnoVentry, said the program is "a great opportunity to expand our presence to customers in our core group who may not seek us out otherwise."

According to InnoVentry, its primary market is the approximately 40 million Americans who do not regularly use traditional bank accounts.

Ken Rees, InnoVentry's executive vice president of business development, in a presentation at Thomson Financial Media's ATM 2000 conference last October, said he prefers the term "self banked." Rees said that approximately two-thirds of the company's enrolled customers have bank accounts but "can't wait three days for their checks to clear."

Those customers are "not just an underserved, but an actively abused, market segment," Rees said. They desire an anonymous transaction, he said, because "they don't like going to a bank and being treated like a criminal or going to a sketchy neighborhood and working with someone behind glass."

Because they are used to paying the steep fees typically charged at traditional check-cashing outlets, they are "remarkably non-price sensitive," Rees said.

InnoVentry collects fees ranging from 1.75 percent to 5 percent of a check's face value at its machines. In the Jackson Hewitt program, the fee will be 2 percent to 3 percent of tax refund checks, depending on the state in which the machine is located.

InnoVentry is one of the earliest entrants to the automated check cashing field. Formerly known as Mr. Payroll, the company started with manned kiosks at convenience stores in 1990. Responding to customers' requests for more private transactions, Mr. Payroll began developing an automated model in late 1996 and deployed its first prototype in June of 1997.

InnoVentry now has about 900 machines at retail locations like Kroger, Circle C, Albertson's and Wal-Mart. The company says it has enrolled more than 1 million customers and cashed more than $1 billion worth of checks.

It just completed a $253 million round of funding led by Capital One Financial Corp. companies. Wells Fargo & Co., which already owned a stake in InnoVentry, also contributed to the latest funding round. InnoVentry said it intends to use the money to grow its network to 4,000 units. The company is on its way, with a recently-announced agreement to install kiosks at 1,500 Kroger stores.

A customer using an InnoVentry kiosk gets touch-screen and audio prompts to enter his Social Security number. If a number isn't on file in the company's database, the user is prompted to pick up a telephone on the front of the machine. The call is routed to a customer service representative, who asks several questions to confirm a customer's identity. A computerized photo of the user's face is taken to help establish his identity for subsequent transactions.

The kiosks also include a multimedia second screen that can deliver promotional messages in English and Spanish.

According to Rees, the initial enrollment process typically takes about 4 1/2 minutes. Return customers can usually cash a check in 1-2 minutes.

The program with Jackson Hewitt is an expansion of a similar program last year, which featured referrals to retailers with RPM units but no RPMs at the tax preparation offices. Though InnoVentry has anecdotal evidence that a number of its customers cash their tax refund checks at its kiosks, it hopes to collect more concrete data this year.

"It's an experiment to see who wants to cash their checks right then and there," Cuthill said. It could result in the future deployment of more InnoVentry kiosks in non-retail locations, although the company's primary sites will remain grocery stores and convenience stores.

"We'll continue to explore different types of business opportunities in locations that are the most convenient for our target market," she said.

The program is also an opportunity, Cuthill said, to better serve Jackson Hewitt customers. "(Jackson Hewitt) has told us the second question (customers) ask after `where's my check?' is `where can I cash it?'"

Dan Tarantin, president and COO of Jackson Hewitt Inc., said, "Jackson Hewitt offices with an RPM machine on site will provide the `last leg' for customers - quick conversion of their checks into cash."