News

Where do C-stores fit in the bill-payment puzzle?

September 2, 2004

According to the Online Banking Report, by 2010 more than 55 million U.S. households will use online banking and ePayments services.

One study found that 24 percent of American households (more than 26 million) currently use online bill payment in all its various forms.

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But what about the millions of Americans who don't have Internet access or a banking affiliation? The Federal Reserve estimates that financial institutions underserve approximately 30 percent of the U.S. population. And the immigrant community makes up the majority of those who are unbanked.

"This group is less comfortable because of past experiences with the banks not being dependable in their country of origin," said Jeff Lenard, director of public affairs for the National Association of Convenience Stores.

Though they are unbanked, many in this under-served market still need to perform frequent financial transactions including bill payments, money orders and money transfers.

"Offering financial service kiosks that give the unbanked a banking presence is very important in areas that have newer American populations," Lenard said. "They are the ones in the most need of these services."

Beyond the unbanked

While the unbanked population is a big market for C-store financial services, those with banking relationships are also using the kiosks.

Some consumers prefer not to pay bills by check. If the average household pays 12 to 15 bills every month, at 37 cents a stamp, the average consumer would save $4.44 to $5.55 a month ($53.28 or $66.60 per year) in postage, besides the cost of the checks, by using a bill-pay kiosk.

"Bill-payment is a very lucrative revenue stream for C-store operators," said Michael Williams, director of sales and marketing for King Kiosk LLC. "These kiosks are ideally suited for deployment in crowded convenience stores; they are so easy to use and robust that they require only minimal attention."

Why are so many C-stores looking to offer kiosk-based financial services? It's all about the potential for additional revenue streams.

According to Lenard, C-stores could eventually offer check cashing, cash-based ticket ordering for sporting events or concerts, or any cash-pay option for services that those without credit cards could use.

"Store owners will be hard pressed to refuse a proposition that could bring in an additional stream of revenues in the form of commissions - typically $3 or $4 on bills paid and money transfers made from kiosks on their premises," said Gregory S. Wilson, president of King Kiosk.

"When the kiosk has been paid off, this revenue stream goes straight to the bottom line, and the availability of a bill payment kiosk brings in more customers, which translates into additional sales of merchandise."