Articles

In-store payment systems:
will ATM fever strike your grocery store?

4/18/2001
Making money with an in-store payment system never seemed so easy!

By Judy Colbert

You can almost see Sam Jonas cringe when grocery store representatives say, "I'm not in the money business," when discussing ATMs. Jonas, president of Cash Resources of Denver, CO, says they are. "They cash checks, they give people cash back. Why not make money on it?" With some 2000 ATMs in stores in 40 states, Jonas knows what he's talking about.

The rest of the argument goes, "I don't want to be associated with charging that (ATM) fee." Jonas responds by saying the store is in the one percent to three percent business, and the person installing the ATM will charge the fee, so why give it away? In other words, the store should have an ATM and should own it, as Safeway does, not lease it or just rent out the space to a bank or third-party operator. With the price of ATMs coming down regularly and the decreased cost and increased capabilities in dial-up systems, the outlay for an ATM is within any store's budget.

Jonas says it's all right to give a customer $10 or $20 back when using a POS debit system, rather than the more typical up to $50, and not charge for that service, but the store is paying bank fees for the customer's convenience. Installing an ATM with a service charge is just another product diversification providing a way to make money within the store's available space. For those who really dislike the idea of charging a service fee, "the store can offer a $1 discount coupon to any meal in the deli, when the ATM is used, as an enhancement that will help soften the blow."

Customers will frequent a store with an ATM over one that doesn't, and generally will spend twenty to twenty-five percent more than non-ATM customers. They eliminate charge backs, disputes, credit card fees, and bad checks. They also avoid customer embarrassment should a credit card transaction not be accepted because the card is maxed out.

Stores that already have an ATM and find a bank branch, with its own ATM, is opening within its walls, should consider keeping an existing ATM in another part of the store, says Jonas, as long as that's part of the agreement with the bank. It could convince the bank to pay an additional fee to the store to eliminate the separate existing ATM.

ATM and debit system operations didn't change much in the first decades after their introduction, but a veritable Chinese menu of options has become available in the past couple of years. Machines now cash paychecks (particularly good for the upwards of forty percent of Americans who are "unbanked" or don't have bank accounts), dispense postage stamps, gift certificates, theater tickets, and even fare cards for local transit operations, such as the Chicago Transit Authority. Each service means a customer doesn't have to go to another store or make another stop in a long list of errands, and it means more profit for the grocery store.

Another option offers the customer the ability to make money transfers – not just from a checking to savings account or vice versa, but also from one person's account to another, similar to Western Union money wire.

Bill Dunn, director of sales for Cross International Technologies, Inc. in Fremont, CA, says phone cards are a real sleeper, with the real money in prepaid cell phone cards, particularly when customers are traveling. "People have a local phone calling program and when they travel they're hit with huge charges for out of state calls. With prepaid cell phone cards, they can enjoy ninety percent savings and," he predicts, "that will be very big in ATMs. It's going to be jamming!"

Dunn says the stores without bank branches are "going to have to add more features and functions to their ATMs to complete with the groceries that do have in-store banks. "We're working on enhancements for the current ATM that allows it to do stuff in a smaller market, such as a much smaller scaled program for a grocery association to do a reward program on an ATM."

One of the problems stores had with lease line operations was the inability to dial in to determine how much money had been transferred and how many transactions have taken place. That will be possible with new technology coming online, says Dunn, "and any store doing at least 600 transactions a month is at the breakeven point."

For groceries with large ethnic populations, instructions can be provided in Spanish, Chinese, Korean, Portuguese, French, or Russian, with up to four language options available, programmed depending on the market. With a language preset option, the appropriate language will come up on the screen as soon as the customer accesses that ATM. "Talking ATMs" are on their way for the visually impaired, and foreign-language talking machines will be available soon.

Just as advertising has cropped up on ATM machines and on receipts, it's appearing on the display screen while the transaction is taking place, still another revenue source for a grocery store. Cash Resources is offering "another arrow in the quiver" of product diversification with ConvenienTV. Already installed in several hundred convenience stores, fast food restaurants, and some grocery stores, the flat over-head television monitors provide entertainment for customers in the check out line and elsewhere throughout the store. Cash Resources is providing the screens at no charge, at least until this out-of-home advertising source has proven it's a moneymaker.

The advertising stimulates product purchases, alerts customers to special promotions, encourages impulse spending, and generates revenue for the store. "Engaging video content is displayed continuously on a high-resolution flat-screen computer monitor," says Jonas, and "advertising messages alternate with a stimulating mix of current news, sports, weather, financial updates and entertainment items. ConvenienTV handles all the details, selling the advertising, programming the content, and trafficking all ad campaigns. We provide the equipment and handle all installation and service details for qualified sites."

Resources:
http://cashresources.cash4you.com
www.tranax.com