Wireless bill payment kiosks in retail locations to appeal to cash strapped

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MONTREAL - No bank, no card, no envelope required. Just cash.
You insert your money in the kiosk and pay bills right away.
Financial kiosks, many of them wireless, are starting to be a global trend found in retail, convenience, gas and grocery stores.
They don't spit out cash like automated banking machines and are suited to cash-strapped consumers paying at the last minute, not necessarily the online banking crowd.
"There's a significant population that the banking industry calls the 'unbanked' - immigrants, people who can't qualify for credit services - I call them the 'credit challenged,"' analyst Larry Fisher said.
Financial kiosks also are aimed at consumers who don't have bank accounts or don't use them much, said Fisher of New York-based ABI Research, a global firm that monitors tech trends.
Once these consumers have used the kiosks to pay their bills, they are likely to browse and possibly buy goods before leaving, he added.
For the average consumer, especially those who don't pay online, the kiosks could be attractive to pay cable, utilities and mobile phone bills, said Fisher, research director of ABI's NextGen division which tracks developing technology.
ABI's NextGen Research division is forecasting that financial kiosks will top 2.6 million units worldwide by 2013, with more than half of them in the United States. Fisher noted that wireless kiosks are a new part of the market.
Canada isn't fertile ground - yet - for such kiosks, but a Vancouver company is among providers of the service.
"Most Canadians pay their bills online because we are a highly banked country," said chairman and CEO Hamed Shahbazi of TIO Networks Corp.
TIO Networks Corp. announced recently it's rolling out its wireless financial kiosks in Best Buy stores in the United States. Shahbazi said his company also has them in Exxon Mobile and Circle K convenience stores and several grocery store chains in the U.S.
At this point, there aren't any plans to bring the kiosks to Canadian Best Buy stores, said Shahbazi.
Shahbazi said American Best Buy stores sell a lot of cellphones and it was an opportunity for his company to let consumers pay these monthly bills and others - at the last minute - with its kiosks.
Shahbazi said about $80 billion worth of bills are paid yearly in cash in person in the U.S. by folks he calls "cash preferred" customers.
"This allows them to constantly hold that cash until the very last minute and make it such that they can avoid penalties and costly disconnection fees."
Here's how it works: Consumers deposit money for a bill payment into the kiosk, which looks like an ATM. It reads how much cash goes in and has a built-in vault. Fees for bill payments range from free up to $5.
The kiosk has encryption technology and uses a communications protocol to talk to TIO's server host, which sends the information to the billing company.
ABI's Fisher said he would be a bit concerned about security since TIO doesn't have its own network. What is it doing to ensure the transactions aren't "corrupted" as they go across the Net? he asked.
Shahbazi said TIO uses virtual private networks on the Internet and noted there hasn't been a security problem with its more than 600,000 transactions a month.
University of Toronto Prof. Tim Richardson said he doesn't believe wireless payment kiosks will stand the test of time.
Consumers will use their mobile phones as digital wallets, something already starting to happen, said Richardson, with the Division of Management at the university's Scarborough campus and an expert on e-commerce.
"It's a convenience," he said. "You don't have to go to the wireless kiosk."
Shahbazi said he's planning to take his bill payment solutions "upstream" to mobile phones, but he still believes that cash is king.

Organizations: ABI Research, NextGen, TIO Networks Corp. Best Buy Circle K University of Toronto Division of Management Scarborough

Geographic location: United States, MONTREAL, Canada Vancouver

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