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Tio Networks Inc., a Canadian company whose name has become synonymous with bill-payment kiosks, is moving away from supporting the machines because of their cost to buy and operate. Although kiosks provide better margins, the company plans to shift its emphasis to the use of clerks to pay bills, Hamed Shahbazi, the company's CEO, tells ATM&Debit News.

Tio deploys some 1,400 bill-payment kiosks throughout the United States and Canada among its nearly 13,000 payment locations. "It is very tough to fund that many machines. It keeps us very busy," Shahbazi says. "The machines also are not scaleable," meaning they are expensive to purchase for a growing business.
Underscoring Tio's decision to move away from using kiosks, the company signed a contract recently with Budget PrePay Inc., a Bossier City, La.-based company that manages its own bill-payment service.

Budget PrePay operates 9,000 U.S. payment locations in grocery stores and drug and convenience stores that enable customers to pay utility and cellular-telephone bills using cash. Instead of customers paying bills using a kiosk, a clerk accepts the payment and records the transaction.

Tio has selected 5,000 of Budget PrePay's busiest locations to offer its bill-payment services. Tio will use the locations to promote expedited bill payment, in which funds are credited to an individual's account within 24 hours, says Shahbazi, declining to say which billers Tio's customers will be able to pay at Budget PrePay locations.

Tio's business-model shift evoked mixed reactions from industry insiders. 
"This is quite a bit of shocking news for a Monday morning," says Francie Mendelsohn, president of Summit Research Associates in Rockville, Md. But Mendelsohn understands that machine maintenance, software and marketing can become expensive.

Bill Lynch, former vice president of Self Service at Source Technologies LLC, a self-service kiosk manufacturer, believes Tio decided that it is payments company, not a kiosk company. Lynch, who now operates IntuDigital, a kiosk-consulting firm based in Charlotte, N.C., says multibiller bill-payment kiosks have had little historic success, and several have either failed or not done well, including Vcoms, owned by Cardtronics Inc. 

The failures stem from several causes, he says.

In many instances, retailers install the machines in the back of the store, where customers often have difficulty finding them, Lynch says.

"Tio did not have the foot traffic to support its machines," says Lynch, adding he conducted his own research by visiting stores and asking clerks if customers were using the machines to pay bills. "Many of them said no," he says. 
It also is sometimes difficult for consumers to determine whether the kiosk accepts bill payment, he says.

Bill-payment kiosks work at a single-vendor location, such as a Sprint store, Lynch says. Depending on the location, the machines process as many as 250 transactions per day. "Customers are coming to the store to pay their bills to a clerk, so it is easy for them to move to a kiosk," Lynch says.

Lynch disputes Shahbazi's contention that self-service bill-payment kiosks are too expensive. "They cost $7,000 to $12,000 each. Anything less than that, and you're asking for trouble," he says.

Tio's name has been synonymous with the bill-payment kiosk industry, Lynch says. "They put out a lot of news releases discussing what they were doing," he says.
In 2006, for example, Tio announced it was taking delivery of bill-payment kiosks manufactured by Tranax Technologies Inc. In the release, Tio said it was "building the largest and most convenient multiretailer network of financial-services kiosks for the cash-preferred consumer marketplace in North America."

Despite Tio's shift in strategy, bill-payment kiosks do have their place, Shabbazi believes. "If a clerk's line is consistently long, it shows there is need for a bill-payment kiosk," he says.  ATM

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