A company that made its business counting sofa change is trying new ideas.
Coinstar Inc. began 12 years ago with a simple plan: Give people a convenient way to get rid of change lying around the house and turn it into paper currency.
And with its cut of 8.9% per counting, the Bellevue, Wash., company has built up a profitable network. It has more than 10,000 kiosks in supermarkets, convenience stores, pharmacies, and university campuses throughout the United Stated and United Kingdom.
Now it is using the self-service kiosks to peddle other things, such as prepaid MasterCard cards and bill-payment services. It says it eventually wants to offer person-to-person money transfers.
"From the retailer's standpoint, we are a point of aggregation for these products," said Steve Verleye, Coinstar's general manager of electronic payment solutions. "We are aiming to be the ultimate middleman."
Coinstar will gradually replace its coin counters with something that looks more like a soda-vending machine, Mr. Verleye said. They will feature back-lit pictures of some available products, including the Truth Prepaid MasterCard, which is issued by Columbus Bank and Trust in Columbus, Ga. Customers buy the card by filling out a form and inserting money at the kiosk; it is mailed within a few days and can be reloaded at a kiosk.
Coinstar also hopes to sell gift cards, prepaid wireless phone minutes, and phone cards through the new machines someday.
Users of the current machines feed them everything from jugs to handfuls of coins and get a voucher that they then take to a store clerk. Coinstar's Web site features a calculator to help consumers figure out how much money might be in that quart or gallon jar (about $57 and $228 respectively).
Mr. Verleye said Vcom terminals installed in many 7-Eleven stores and Western Union Financial Services Inc. outlets are his company's main competition. The new Coinstar machines will have "70% to 80% of the functions Vcom has" but will not dispense cash, he said.
Unlike Vcoms, which are sold to stores, Coinstar kiosks will be supplied for free, and revenue will be split with the merchant, Mr. Verleye said.
"The Vcom is a very expensive kiosk," he said. "It is a very exciting product, but it costs so much that no one can afford to put it in stores." A retailer has to guarantee a certain amount of transaction volume to justify high set-up costs, he said.
Peter Rowan, Coinstar's vice president of new business innovation, said Coinstar devices cost retailers nothing in labor or operating expenses, so revenue from the machines "falls to their bottom line."
Mr. Verleye said the "general attitude" of grocery stores that run Western Union is that "anything we can automate and take off the customer service counter is a good thing."
Coinstar, which reported 2003 net income of $19.6 million on $176.1 million of revenue, also plans to provide payroll card statements for employees of the stores that use its kiosks. They will be able to use the machines to withdraw cash or check their savings account balances.
