Article

Bill payment processor targets cash-preferred U.S. Hispanic population

TIO Networks caters to the under- and unbanked with its self-service business model.

August 25, 2011 by Kim Williams — Reporter, NetWorld Alliance

According to a Center for Financial Services Innovation consumer study, there are 20.6 million under- or unbanked Latino consumers in the U.S. Expedited bill payment processor TIO Networks is seeking to tap into this "cash-preferred" market with its self-service financial services kiosks business model.

The study states that Latino consumers are more likely to be unbanked than underbanked, especially if they are born outside of the U.S. They are also more likely to prefer cash as their main method of payment, which means they must rely on alternative financial services for cash-based bill payment, reloading pre-paid debit cards, etc.

"We have a large number of expedited billing services on the machines, which is where we find the most usage coming from the Hispanic segment of the population" said Sam Shahbazi, EVP of TIO Networks. "Not many banks and financial institutions cater to this part of the population, so these machines become a financial institution for this segment."

According to the U.S. Census 2010, approximately one out of every six Americans is Hispanic. Under- and unbanked Latinos represent 47 percent of the 44 million Latinos in the U.S., so the optimism in the growth of the long-term financial viability of self-serve kiosk networks is justified, Shahbazi said.

"We are enabling existing and new ATM network operators to offer self-serve financial services kiosks alongside traditional ATM services, creating new revenue opportunities within the market," said Behshad Hastibakhsh, senior public relations director for TIO Networks.

TIO's kiosks function as reverse ATMs, so cash-preferred consumers can pay their wireless, utility, cable and other bills in convenience stores, groceries and other retail locations. Consumers can also use these kiosks to reload their prepaid NetSpend debit cards and Visa ReadyLink cards. There is an average processing fee of $3 - $5 associated with each transaction.

A greater proportion of Latino consumers expressed a preference for prepaid cards versus checking accounts if the cost associated with each was the same, according to the CFSI study.

TIO partnered with ATM/kiosk manufacturer GenMega to provide services to the Sunbelt states, but has since expanded into other markets across the U.S. as well, having representation in more than 40 states. While Shahbazi could not provide names, he said the company is in the process of signing up more billers in several of the non-Sunbelt markets.

"We think with this model, the consumer will eventually build up their credit, so we'd like to offer credit card payment services and other payment modalities through the kiosks at some point as well," Shahbazi said.

Shahbazi said the company has tried to keep it simple for operators by primarily offering its products for the GenMega GK1000 series kiosk. TIO also sells its products through a GenMega reseller, ATM equipment.com, so an operator can purchase the machine and add the desired products at the same time.

"Being in kiosk manufacturing, I have had a long standing relationship with TIO Networks for the past six years. Together we have launched bill-pay kiosks in locations all over the United States, and I have seen the bill pay industry take great strides towards self-automation during that time," said Wes Dunn, vice president of sales at Genmega.

Through strategic partnerships, TIO is able to offer geographic-specific access to billers and service providers for particular demographics and neighborhoods.

"Specifically targeting the Hispanic market by offering self-serve financial services through kiosks is really unique to TIO," said Kimberly Gartner, vice president of advisory services at the Center for Financial Services Innovation.

Gartner said she knows of a number of companies that have expressed interest in the self-service financial kiosk business model and are either piloting or preparing to pilot.

"Walmart, at our conference in June, talked about how they are advancing some of their efforts. They've long been working on a variety of different models for deploying their financial products," Gartner said. "I think we are going to be seeing more implementation of self-service kiosk models to reach a variety of consumer segments."

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