In the age of noncash payments, Coinstar remains a vital link to the unbanked
Web and mobile bill payment provider Doxo is taking its first step into cash payment options by partnering with Coinstar to enable cash bill payment at thousands of coin-counting kiosks in retail locations.
Though cash is used for roughly 6% of bill payments, that still equates to more than $235 billion annually, according to Aite Group. To tap into this audience Doxo is working with Coinstar to set up kiosk bill payments by the second half of this year.
"We feel a lot of those cash payments must be the unbanked or underbanked consumers and they suffer through things like late payments because of the current inconvenience of making cash payments," said Jim Kreyenhagen, Doxo’s vice president of marketing and consumer services.
With the ability to make payments by bringing cash to a Coinstar kiosk, consumers can avoid having to go to a utility biller office during business hours, a task that represents the only other option to use cash.
"Still, for others, it is sometimes just a matter of wanting to pay with cash because they feel it is safer and they pay cash for a lot of things," Kreyenhagen said.
But paying utility bills is a different animal because a customer can't send cash through the mail or always get to a provider during business hours.
"The trend in using cash is going down" because of digital commerce, "but at the current rate of drop it is going to take a long time to go away," Kreyenhagen added. "If you are a utility biller, you still have to be able to accept cash payments."
The partnership puts Doxo and Coinstar up against the likes of Western Union, which offers cash payments or money transfers at their locations, or individual retailers that sometimes take cash payments in their stores for various service providers.
Because the recession years between 2007 and 2011 drove many consumers to pay cash for household services and avoid more card debt, other cash-payment companies began offering the service.
Sunnyvale, Calif.-based PayNearMe says it has grown steadily since 2009, establishing a cash payment network at 27,000 retail outlets like CVS Pharmacy and 7-Eleven convenience stores.
Michigan-based DivDat also has added a cash payment option service at its kiosk network, which also accepts credit and debit card payments and scans personal checks to convert to ACH payments.
For the Doxo-Coinstar arrangement, consumers would use the Doxo app to choose "Pay with Cash at Coinstar." The app generates a code that is provided at the kiosk with payment, and Doxo sends the money.
"On a long-term basis, we think the transaction will be able to start right at the kiosk, as someone would be able to choose from a menu of billers on a screen at the kiosk, and insert the cash," Kreyenhagen said.
Seattle-based Doxo operates with more than 45,000 payable billers on its network, while Bellevue, Wash.-based Coinstar has about 21,000 kiosk locations across the U.S., with as many as 7,000 set to be able to handle the cash bill payments by the end of the year.
"We will see how quick the adoption is, but we think billers will sign up to help their customers in knowing where Coinstar machines are located," Kreyenhagen said. "As billers join and want to do this, they will tell their customers that this is an option."