News

Coinstar goes ATM. Kind of.

February 28, 2013

Starting this month, Coinstar users in California, Ohio and Texas can use the coin-counting kiosks to add money to, or withdraw money from, their PayPal account, a move that the company said furthers the convergence of brick-and-mortar and online shopping.

Coinstar and PayPal conducted a test of the new service in the Dallas metropolitan area last year and quickly saw adoption and interest from users. Initial test results revealed that 40 percent of kiosk users who used the PayPal feature went back to use PayPal on a Coinstar kiosk an average of two times a month.

Users pay a $3 fee to withdraw cash from their PayPal account at a Coinstar machine; the rate is comparable to what a bankcard holder pays for using an out-of-network ATM. Total withdrawals are limited to $200 per day and $500 per calender month.

"PayPal on Coinstar exemplifies how we continue to empower consumers to change what they have into what they want," said Mike Skinner, president of Coinstar's Coin business. "From the convenience of a grocery store, consumers can turn their coins and paper currency into digital spending power anywhere PayPal is accepted."

"We're delighted to work with Coinstar to enable our users to transact anytime, anywhere and in any way," said Dan Schatt, head of financial innovations at PayPal. "PayPal on Coinstar kiosks provide customers with a convenient way to add coins and paper currency to their PayPal account and spend their money anywhere PayPal is accepted."

The program could raise new regulatory issues for Coinstar. In late 2011, the Durbin amendment to the Dodd-Frank act caused card companies to effectively raise interchange fees for businesses like Coinstar that deal almost exclusively in small transactions. It prompted Coinstar to negotiate special rates with the cards and shift to a "single billing" model to reduce the number of swipes it pays for.

Read more about transaction processing.