CashWorks, one of the most talked-about start-up companies of recent years in the ATM industry, has been sold.
General Electric unit GE Consumer Finance (formerly part of GE Capital) purchased Texas-based CashWorks, a provider of check cashing and other financial services at retail locations, last month.
Financial terms were not disclosed.
Ken Rees, president of CashWorks, said the deal wasn't just about money.
"We were well capitalized before the acquisition," he said. "But it will help us grow more aggressively by opening doors for us with retailers and consumers who find the GE brand more powerful than CashWorks."
No decision has been made on how to utilize the GE brand and whether it will appear on sales collateral and CashWorks terminals, Rees said.
The CashWorks program uses a proprietary point-of-sale terminal called a PayPort to authorize transactions. Unlike totally automated check-cashing programs, a clerk confirms the check holder's identity and enters relevant information using the PayPort's keypad. The check holder is then directed to an ATM, where funds are dispensed.
CashWorks spurred lots of interest in independent ATM operators, who were eager to add new transactions to help replace declining surcharge revenues, when it was introduced in early 2002.
ATM manufacturer Tidel was an early investor in the company, contributing $500,000 in convertible debt, which later converted to CashWorks stock. Tidel, Triton, Tranax and NexTran modified their software so their machines could interface with the PayPort terminal.
Beyond the ATM
CashWorks check cashing is offered at more than 500 retail sites. In the second half of 2003, the company began expanding beyond ATMs, signing an agreement with software provider Infonox to begin developing a multi-functional financial services kiosk.
"We believe different platforms will be effective on different channels," Rees said. "What works in a mom-and-pop c-store isn't necessarily going to work in a large chain, and it's certainly not going to work in a large grocery store."
CashWorks also introduced a stored value card to allow proceeds from cashed checks to be loaded directly from a PayPort terminal onto the cards.
While a prepaid card would seem to be an obvious area of synergy for CashWorks and GE Consumer Finance, which is an issuer of private label credit cards for clients like American Eagle Outfitters, Rees said no decision has been made on whether the companies will partner on a card program. The CashWorks card, issued by FSV Payment Systems, is currently used at Kum & Go convenience stores.
"We've experienced a lot of success with it," Rees said. "Retailers see it as a strong value added feature to our check cashing program."
Indeed, the method is more streamlined than the original CashWorks model. Because retail ATMs are typically loaded only with $20 bills, clerks must dispense at least some money from the store till for the exact face value of a check.
With a card, consumers can get the entire amount of cash in their checks loaded onto a card, then use it to make purchases at the point-of-sale or go to an ATM and retrieve all or part of their funds.
Rees said that CashWorks will be able to leverage some of GE's other capabilities, including its expertise in risk management.
CashWorks will remain in Texas, and all 30 employees will continue to work for the company. More employees will be added, Rees said, and the company will likely continue to use both direct and indirect sales channels.
"We've developed a strong direct sales force that's gotten us into locations like Circle K and Kum & Go, while the ISOs have done a tremendous job of getting us into the small, independent locations," he said.
Cristy Williams, a GE Consumer Finance spokesperson, said the CashWorks acquisition offered a way for the company, whose traditional focus has been issuing private label cards for corporate customers, to "round out its financial service offerings."
She added, "Retailers are interested in offering these kinds of services to their clients, and we think CashWorks offers them to consumers with superior technology."
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