InnoVentry, a company that many considered a bellwether of advanced ATM functionality, shut down on Sept. 21 after weathering months of financial problems.

According to a report in the Sacramento Bee, company directors voted to cease operations after it became obvious InnoVentry would not be able to obtain additional financing.

According to the Bee, 300 employees will receive one week of severance pay. The company's data and call center in Sacramento, where the majority of employees were located, hosted an on-site job fair on Sept. 25 for employers to interview laid-off workers.

Late last month, San Francisco-based InnoVentry cut about 150 jobs following the resignation of former CEO Frank Petro. Former PepsiCo Inc. marketing executive Bruce Schroder was named interim CEO, and the company began trying to raise more money.

"We were in a cash crunch in the final weeks. InnoVentry was unable to obtain additional financing," company spokesman Gil Roeder told the Bee.

Calls to Roeder placed by ATMmarketplace.com were not returned.

Since it was founded in 1998 as a joint venture of the wholesale bank of Wells Fargo and Cash America International, InnoVentry had raised more than $400 million, including an infusion of $253 million in February provided largely by Capital One and Wells Fargo.

InnoVentry had deployed about 1,000 terminals that offered check cashing in addition to standard ATM functionality at retail locations in 24 states, including Kroger, Circle K and Albertson's stores.

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Shortly after receiving the $253 million in February, the company announced its intent to grow its network to 4,000 units and to begin offering money orders at its kiosks this fall, followed by wire transfer and other financial services.

Those plans may have been too ambitious, said Joe Gable, a senior industry consultant for the Gasper Corporation, which provided remote management software for InnoVentry's kiosks.

"They had some very innovative ideas. I think they just may have tried to accomplish too much at one time in a very tough economy," Gable said.

Michael Marcinko, president of Nubanc ATM & Financial Services, which sells its own check-cashing terminal, said he believed that InnoVentry's overhead may have been too high.

"Like any other business, the winners are going to be the low-cost operators," Marcinko said. "(Check cashing) is a business of nickels and dimes, so you've got to keep the costs down."

InnoVentry used a "dot-com business model," Marcinko said. "They tried to grab market share regardless of cost, assuming that the profits would take care of themselves later. That's just not going to work in the financial services industry."

Thomas Warrichaiet, controller of a Cambeck Petroleum store in Janesville, Wis., is concerned about what will happen to his store's machine, which it owns outright. The store paid about $55,000 for the machine in December of 1998. (While InnoVentry owns the majority of its terminals, some were sold to retailers in 1998-99.)

While it took about a year to build up a customer base, Warrichaiet estimated that about $300,000 worth of checks were being cashed every month. "The machine worked really well for us," he said. "It boosted our sales by bringing people with money into our store."

Warrichaiet said that InnoVentry had problems with its administrative infrastructure. "They didn't bill us for maintenance once in the first year," he said. "In the first two years, we probably only paid for three months of maintenance. It seemed like it took forever to get it sorted out."

"If they had the same problems with other customers as they had with us, I'm not really surprised that they ran into financial problems," Warrichaiet said.

Gable believes that InnoVentry's failure may have a "residual effect" on the rest of the industry. "Because of what they were trying to do, InnoVentry had a lot of people's attention," he said.

However, Marcinko said he is not unduly concerned.

 "I think people will take a second look at it. InnoVentry did a good job of educating the public about the product, so I think there's probably going to be more demand now," he said. "Automated check cashing will happen. It's just going to have to happen in a more efficient model."

While it has not yet deployed as many machines as InnoVentry, Dallas-based 7-Eleven has rolled out 94 kiosk/ATM hybrids it calls V.coms in Texas and Florida. Following the conclusion of a three-month pilot, 7-Eleven plans to begin a national rollout of more V.coms early next year, according to 7-Eleven spokesperson Margaret Chabris.

The V.coms offer check cashing, money orders and wire transfers, with plans to add more functionality in the future.

Chabris emphasized 7-Eleven's slow and steady approach for its V.com program, noting that the retailer first conducted a proof-of-concept pre-pilot in Austin, Texas in 1999. Following that pilot, several key changes were made, including shrinking the size of the terminal, switching from an OS/2 to a Windows NT-based platform and adding a bunch note acceptor.

7-Eleven also recruited strategic partners such as American Express, Western Union and Certegy "to assist in offsetting the capital needed for the rollout and also to provide expertise," Chabris said.

Stressing 7-Eleven's commitment, Chabris said, "Advanced financial services are absolutely a viable business for us."