The large U.S. population of unbanked and underbanked consumers is fertile ground for kiosks offering financial services such as bill payments, money transfer, and cash transactions. These kiosks provide a low-cost alternative to banks (and others) for cash-preferred consumers. The FDIC estimates that approximately one-third of the U.S. populations falls into this category. “The underbanked market is growing in the U.S.,” said Rob Goehring, chief marketing officer at Vancouver, Canada-based TIO Networks, which operates a network of bill payment kiosks across the U.S. “More and more people are moving away from banks to alternative financial services providers and general-purpose reloadable prepaid debit cards, due to the high charges imposed by banks for checking accounts.”
Currently, the walk-in bill payments market generates annual fee revenues of $2 billion a year in the U.S. Mobile devices represent a major opportunity with underbanked consumers as they may not be heavy users of the Web since they do not tend to have desktop PCs. But they use mobile phones more heavily than the average American for communications with other people and for activities such as paying bills. “There is the potential for bill-payment services companies like TIO to offer mobile-kiosk integration, so mobile users can make cash payments at kiosks,” Goehring said. “A customer could pre-stage a bill payment or an online shopping transaction on their smartphone. They would receive a barcode or a PIN on their smartphone, which they would enter at the nearest TIO kiosk to make cash payment.”
General-purpose reloadable prepaid cards have become a major force in the U.S. financial services industry as well. While originally targeted at unbanked and underbanked consumers as well as millennials, GPR prepaid cards are popular with mainstream consumers for activities such as travel, online shopping and household budgeting. The Aite Group predicts that the amount loaded onto U.S. GPR prepaid cards will rise from $43.2 billion in 2011 to an estimated $106 billion in 2016.
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 2013, to 15-20 percent by 2017. Also in that market, Western Union offers money transfers at 100,000 ATMs worldwide, as well as at self-service cash-only kiosks in a number of markets.