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From the January/February 2009 issue of ISO&Agent magazine.
ISOs' never-ending search for revenue opportunities and services to supply to merchants, kiosks thus far have fallen through the cracks. Several ISOs contacted by ISO&Agent either have ruled out offering kiosk services or have not considered offering them because they are not an obvious fit for their clients.
Through kiosks, consumers can get cash, buy stamps, pay utility bills or buy a merchant gift cards among other services. ISO kiosk revenue could model on traditional card services that generate recurring revenue for each transaction or that pay a fee to the sales agent when a device is leased or sold.
With a concentration on selling to medium and large-size merchants, agents at Capitol Payments Systems Inc. have stayed away from offering kiosks, says Bob Schoenbauer, president of the Annapolis, Md.-based ISO. "We haven't found kiosks to be profitable enough for our agents," Schoenbauer tells ISO&Agent.
Similarly, agents at Affinity Payment Systems LLC, a Warsaw, Ind.-based ISO, see little benefit to selling a kiosk. "We don't sell it because it's not a clear fit for our retail and restaurant clients," and many of them do not want the equipment in their location, says Scott Miller, Affinity president and CEO.
Moreover, kiosks are not a product Affinity's merchants are requesting, Miller says. "We rely on our merchants to make sense of these things for us to know whether we should invest and spend our time on [them]," he says. "Kiosks are not one of those areas."
These ISOs may sense something about the potential for kiosks. The number of these devices deployed worldwide at the end of 2008 totaled 1.8 million, down 100,000 from the 2007 tally of 1.9 million kiosks, according to a research report by Summit Research Associates Inc., a Rockville, Md.-based kiosk-consulting firm.
Last year's kiosk total was 200,000 short of Summit's original projection at the end of 2007, says Francie Mendelsohn, Summit president. However, the recession negatively affected most industries that expected growth going into last year, she notes.
Companies getting into the kiosk market must be patient to make money, as there are few opportunities for explosive growth, Mendelsohn says.
Typically, the first thought that may come to mind when identifying with kiosks is an ATM. But the kiosk market has moved beyond basic cash-dispensing machines.
A more-recent example is a DVD movie-rental kiosk from Redbox Automated Retail LLC. Many supermarkets deploy Redbox machines near entrances or exits so consumers can use them to rent and return DVDs at their leisure. Redbox would not say if it uses ISOs to find merchant locations.
Redbox deploys its kiosks in 10,000 locations nationally, including McDonald's Corp., Wal-Mart Stores Inc. and Walgreen Co. retail locations, according to the Oakbrook Terrace, Ill.-based company. Photo and coin-exchange machines are other types of non-ATM kiosks that have existed for many years. Airline check-in kiosks are yet another example. ISOs typically do not deploy these types of devices.
"Last year, we still saw kiosk projects being announced, but I would say that the size of some of those projects is smaller than they were once planned to be," Mendelsohn says. "You can blame the general economy for a lot of that."
About 1.2 million kiosks are deployed in North America, and Mendelsohn estimates that about 90% of those are in the U.S. "Now, more than ever, you make a great argument to put all kinds of kiosks out there because what kiosks do is allow a business to offer more services while potentially having fewer employees," Mendelsohn says. That is particularly true if a kiosk is located outside and can be used at hours when the business is closed, she says.
Economy Could Spur Use
Internet access and bill-payment and check-cashing kiosks are three recent kiosk offerings that consumers may find useful during a troubled economy.
Other evolving kiosk services support prepaid gift cards, gaming, lottery services, books, ringtones, stamps, and government and social services.
Vendors deploy kiosks in a variety of ways. Sometimes a business will see the opportunity to offer new services or change how it offers existing ones and will contract with a company to have a kiosk installed. In other cases, a kiosk company may convince a business that it has the right location and customer base for a machine.
Kiosk deployment could include software or remote-monitoring services if the business wants them. Otherwise, a vendor could supply just the equipment if the business wants to install and maintain the kiosk itself or through a third party.
ISOs have the potential to get more involved in the kiosk market, but most have shied away from them. An ISO with a large merchant base, for example, might convince a client that some kiosk services are applicable, says Mendelsohn.
"It certainly is an avenue for them to pursue," she says. "It all depends on what kind of kiosk it is and whether it really makes sense for that type of business. Bill payment is really set to explode in a big way and can be used in different situations."
Despite the current economy, the kiosk market will continue to grow over the long term, and that could mean opportunity for ISOs, Mendelsohn says. "The key is that they will have to be very patient about making money," she says. "In these times, you have got try to make money any way you can." ISO
