STRATEGIC PARTNERS
7-Eleven has streamlined its in-store financial service centers and renamed the ATM/kiosk hybrids 'V.com.' It plans to launch the V.coms first in Florida and Texas, then nationally this fall.
The original 7-Eleven financial service center was an unwieldy 9-foot-long piece of equipment that looked more than a little incongruous sitting in Austin, Texas convenience stores in 1999.
It cashed checks, issued money orders and performed money transfers, in addition to dispensing cash. But despite all of its advanced functionality, it ran on the same OS/2 platform that ATMs have been running on for the past two decades.
It was "a whole bunch of technology stitched together," said Andy Orent, vice president of self-service for the Americas for NCR, the vendor that produced the units. "I would call it a proof of concept."
Now sold on the concept, 7-Eleven is introducing a new version of the high-tech ATM/kiosk hybrid. Renamed the V.com, it's leaner, meaner and just 54 inches long. It's still shrinking, and will ultimately be just 36 inches long. With an eye toward even more future functionality, it now runs on a Windows NT browser-based platform.
It has a few more bells and whistles, including a nifty bunch note acceptor that can take a wad of bills, sort and count them and, perhaps most importantly, return those same bills to a customer if he decides not to buy a money order after all.
"It's going to allow us to offer all of the services we've been talking about in a more flexible and customized manner," said Rick Updyke, 7-Eleven's vice president of business development and e-commerce. "We're creating a technologically advanced delivery vehicle for financial services."
Until a few months ago, Updyke's business cards read vice president of planning. His new title, like the unit itself, reflects the new direction of the V.com program.
Updyke said offering financial services isn't such a stretch for 7-Eleven, which is better known for its Slurpees. The retailer sells more than four billion money orders and tallies more than 100 million ATM transactions a year.
"We were already in the financial service business," he said. "It's our business to make things more convenient, and that's what we're doing here."
The V.com program utilizes 7-Eleven's own frame relay network, which was installed some years ago to help track inventory and manage other retail information. Few ATM or kiosk deployers have access to such a highly developed, proprietary telecommunications infrastructure.
7-Eleven installed five of the new V.coms at stores in the Dallas/Fort Worth area in late December. The retailer expects to have another 90 units in Florida and Texas by mid-May. After a three-month "shakeout type of pilot," Updyke said 7-Eleven will begin rolling them out across the U.S. He declined to reveal a projected total number.
After money orders, money transfers and check cashing, Updyke said 7-Eleven will consider ticketing, depository services, bill payment and e-commerce with fulfillment.
The company will model its e-commerce element after a similar program at 7-11 Japan, in which customers order books, CDs and other items at a kiosk similar to the V.com, then return to the store to collect their merchandise. Updyke believes such a program is bound to be a winner in the U.S., where many people are not home during the day when merchandise ordered online is delivered.
It's designed to leverage 7-Eleven's already-existing massive distribution network, which Updyke said delivers consumer goods to some 3,800 stores on a daily basis. "It could even be extended for returns," he said.
Other non-financial services 7-Eleven may offer include streaming content such as weather reports, news headlines and map printing a la Mapquest. Updyke said some services may be free, while others will carry a fee. All of the services other than traditional ATM transactions carried a fee in Austin, as do those in Dallas/Fort Worth.
Fees are based on "what is competitive in the marketplace today," Updyke said. For instance, the going rate on check cashing is between 1.75 and 6 percent.
"(The V.com) offers the possibility for far more fee generation than what you have in the traditional ATM environment," said NCR's Orent, noting that this is particularly important as per-terminal ATM transactions continue to decline.
Updyke said that working with "the right partners" is a key to making 7-Eleven's V.com program work.
The retailer recently signed seven-year, exclusive agreements with Western Union Financial Services Inc. and Integrated Payment Systems Inc., both subsidiaries of First Data Corp., to provide money transfer and money order services through the V.com kiosks.
American Express, which already provides ATM services for about 90 percent of the machines at 5,300 c-stores, will also provide service on V.com in all the areas where it currently holds 7-Eleven ATM contracts.
The V.com strategy will include a card that will be linked to a store loyalty program and can be loaded with prepaid products and services such as long-distance phone minutes or gasoline. A V.com user could cash a check, take part of it in cash and store the remainder on the card to purchase gas and phone time later.
While consumers who don't carry other cards are a primary market, Updyke said 7-Eleven intends to attract a broader audience by "providing additional utility so that people have an incentive to carry it and use it."
The card will initially have a magnetic stripe, but Updyke said it will be converted to a chip. "We're going to condition consumers to smart card-like capabilities using a mag stripe, and then just convert to chip technology at some future point."
The original Austin financial service centers won't be relegated to the scrap heap. Instead, they will be installed at Mexican 7-Eleven stores to facilitate money-transfer transactions between the U.S. and Mexico.
It's part of the company's "Education is Freedom" campaign, with commitments of approximately $10 million over the next four years tosupport Mexican President Vicente Fox's economic development programs.
As part of the campaign, the retailer also will provide: $100,000 in educational grants for Mexican-Americans administered through the Hispanic College Fund; retail training programs and employment for Mexican-Americans and internships for college students; and a vocational program that will put young entrepreneurs on the track to either joining 7-Eleven at the corporate level or owning their own store as a franchisee.
While all of this enhanced - and thus more expensive - technology is not for every deployer, Orent said NCR is working with other customers interested in offering advanced services, most notably Fidelity Investments, which is dabbling in deposit acceptance.
Financial institutions are a logical customer, Orent said, because they could conceivably migrate most of their teller transactions to an ATM/kiosk. He believes other large retailers may consider them, although it's not likely that many will choose to own the units as 7-Eleven does.
"We don't expect to see very many people going out the door with a singing, dancing device," Orent said, "but we do expect to see various points of implementation."
