Tio Networks Offers 'Reverse ATMs' for Underbanked

Technology company Tio Networks Corp. has developed software for "reverse ATMs" that collect money from lower-income customers instead of dispensing it.

More than 90% of the people who use the "reverse ATMs" are unbanked or underbanked, according to Tio executive vice president Sam Shahbazi. They deposit cash in the machines to pay bills from utilities, cell-phone providers, cable companies, credit card issuers and stores.

Vancouver, British Columbia-based Tio writes the consumer-facing software for the machines and processes the bill payments they collect from customers.

The machines, often located in convenience stores, typically accept payments for 60 to 65 billers. Many of those companies accept and post payments almost immediately, which Shahbazi calls an important factor for lower-income users who may pay a utility bill at the last moment to prevent a shut-off.

Customers pay a fee of $2 to $5 to use the reverse ATMs, depending on Tio's negotiations with local billers. For example, a $3 fee would generally be split between a 75-cent fee for the company billing the customer; a 56-cent fee for Tio for processing the payment; and a $1.69 fee for the machine's deployer.

Customers who insert more cash than is needed to pay their bills and the related fees receive credit towards the next month's bill, Shahbazi says.

Genmega Inc., a Fremont, Calif.-based manufacturer, makes most of the machines that use Tio software. Independent sales organizations pay about $4,000 each for a machine and Tio charges a one-time licensing fee of $595 for the software.

Tio has been in the reverse-ATM business for a decade and now is looking for more independent sales organizations willing to buy and set up the machines. The company already owns and operates 1,200 machines, while independent deployers have placed between 200 and 300 of them, according to Shahbazi. Some 35 or 40 independents own machines in an ISO program that began in 2004, he says.