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The evolution of bill payment kiosks in Eastern European countries

July 2, 2013 by Vlad Kravtsov — Product Manager, Crane Payment Solutions

The industry of self-service bill payment kiosks has gained big popularity within many Eastern European countries. To date, the total number of deployed kiosks is estimated at more than 500,000 devices. A list of payment services offered at kiosks is quite long and typically includes:

• Top-up a mobile phone account/pay mobile phone bill
• Utility bill payment
• Internet and TV service pre-payment
• Credit of electronic or banking account
• Insurance premium payment
• Money transfer / remittance
• Money deposit
• Credit repayment to a bank
• Employment insurance and pension fund payment
• Income tax payment

Bill payment kiosks provide a convenient alternative to online or at bank branch payment that is quite appealing to the unbanked population which varies by country, but usually represents a high percentage of the overall population. High availability of bill payment kiosks along with access to electronic wallets are the major contributors to the rising popularity of bill payment kiosks. Electronic wallets, as an alternative to bank accounts, have been introduced by large independent payment network operators. E-wallets can be registered at a kiosk that provides a consumer with a PIN code for accessing it. Topping up an e- wallet is also done at a kiosk by depositing cash through a bill validator.

Russia is a prime example of an Eastern European country that is heavily unbanked. Many Russians do not open bank accounts, simply because they do not trust banks. The default of 1998 and crisis of 2008 have made people very cautious about where to keep their savings. On the other hand, businesses do not trust consumers thereby denying any credit for phone accounts or credit accounts.

Bill payment kiosk deployment in Eastern European countries began about 10 years ago. The initial business model of the self-service kiosk business was built around large aggregators/owners of payment networks, which offered a complete business solution to independent operators who wanted to enter this business. The model involved an operator buying or leasing kiosks from the aggregator, deploying kiosks at locations picked by the operator, assigning a commission for each payment made from operator's kiosks, and opening an account with the aggregator and paying a deposit. Each payment processed by the operator's kiosk is paid out of the operators' account. In turn, the operator's revenue is based on a commission that is deducted from cash that operator collects and deposits to aggregator's bank account.

The initial model has recently evolved with banks intervening in bill payment kiosk industry by buying-out a significant number of independent operators. This is due to the lower cost of kiosks in comparison with ATM machines ($2,000 to $3,000 vs. $12,000 to $25,000) and their lower annual maintenance cost ($1,000 vs. $3,000).

Another driver for banks to use bill payment kiosks is related to operational cost saving of a new way of banking; remote banking through 'light' ATM machines that are actually bill payment kiosks. More and more banks are engaged in remote banking thanks to real estate and staff savings that are offered by the introduction of unattended 'light' ATM machines with 24/7 mode of operations and minimum day-to-day maintenance required. Some market researcher estimate that by 2017 and depending on the country, banks will own 20-to-25 percent of kiosk business market share.

About Vlad Kravtsov

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