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This article appears in the May 14, 2009, edition of ISO&Agent Weekly.
TSYS Acquiring Solutions, a unit of Total System Services Inc., is looking to capitalize on its 2008 purchase of Infonox Inc. by entering the kiosk market.
It is a move that not all processors take on, but TSYS Acquiring finds itself owning Infonox, a 10-year-old developer of payment software. Infonox's KioskPass software, which can run on any Microsoft Windows-based ATM or kiosk, enables consumers to use kiosks to withdraw money, cash payroll checks, make funds transfer, pay bills, receive prepaid gift cards and make check deposits via a remote deposit capture service.
"Many 'mom-and-pop' merchants are doing this on the counter already," Ashim Banerjee, TSYS Acquiring chief information office for information technology, tells ISO&Agent Weekly. "It's just a small step to move it to the kiosk." Banerjee estimates there are 55 million unbanked consumers, who TSYS sees as the primary kiosk customers.
The move into kiosks is emblematic of the importance of Infonox to TSYS, says George Peabody, director of the emerging technologies advisory service at Mercator Advisory Group Inc., a Maynard, Mass.-based research and consulting firm.
"Infonox now has a larger parent company and the ability to leverage the relationships that TSYS has," Peabody says. "It says a lot about TSYS to take in a company like this and let impact its core processing so profoundly."
One hurdle will be pricing because kiosks have typically had high upfront costs, Peabody says. TSYS declined to provide pricing for the product but says resellers are able to mark up the price to generate revenue and, in some cases, see a revenue share, a spokesperson says.
"This is adding TSYS muscle to Infonox technology," Peabody says.
ISO Relationships
TSYS Acquiring also hopes its relationships with ISOs will give added muscle to the kiosks.
"We don't have the distribution channel to get this to the marketplace," Robert J. Philbin, TSYS Acquiring president, tells ISO&Agent Weekly. "The ISOs do."
Another challenge, however, may be convincing ISOs, which are accustomed to merchant account sales. As reported earlier this year in ISO&Agent magazine, some ISOs are reluctant to take on kiosk sales until enough merchants request them.
"We haven't found kiosks to be profitable enough for our agents," Bob Schoenbauer, president of Capitol Payment Systems Inc., an Annapolis, Md.-based ISO, told ISO&Agent.
Analyst Francie Mendelsohn estimated in February there were 1.2 million kiosks in North America, with 90% of them in the United States.
Philbin is not too concerned about ISO reluctance.
"All of what we're talking about right now will leap frog today's kiosks," he says. "We have to train our clients to see the possibilities."
ISOs typically have measured success on the number of merchants in their portfolios, Banerjee says. "The ISO of tomorrow will base success on how many consumers it brings to a merchant," he says.
"Kiosks are about driving more transactions," says James Van Dyke, president and founder of Javelin Strategy and Research, a Pleasanton, Calif.-based research firm. "The profit is going to be more in the transactions than in the device itself."
Success for TSYS depends on finding merchant segments where kiosks augment sales, such as movie theaters, Van Dyke says.
"If they can find a few merchants that really have a good fit, then that can be a strong play to drive transaction volume," he says.
Philbin is optimistic that recent changes in TSYS Acquiring's processing system make it easier for ISOs with portfolios having as few as 5,000 merchants to "cost-effectively" use his company. In the past, Philbin says, the threshold was between 12,000 and 15,000 merchants. "Demand will drive us to build an infrastructure around kiosks," he says.
TSYS Acquiring has yet to put an official brand name on the KioskPass software and hardware bundle, a spokesperson says. The company also works with a variety of kiosks manufacturers, which it did not name.
TSYS Acquiring says it is developing a way to adapt KioskPass to run on ATMs made by Germany-based Wincor-Nixdorf AG, Dayton, Ohio-based NCR Corp. and North Canton, Ohio-based Diebold Inc.
"Going direct and establishing our own relationships with hardware manufactures is definitely part of our 'go-to-market' strategy," says Dean Seifert, TSYS Acquiring senior vice president of sales. "Branding the hardware not only allows us to maximize the performance of our KioskPass application, but it also allows us to manage costs in such as way that we can make it possible for merchants of all sizes to offer a full-services payment kiosk."
TSYS Acquiring will provide all of the hardware, installation, cash services and customer support, Banerjee says.
"We don't believe a merchant or an ISO should take on support of the kiosk," Seifert says. "It's about off-loading cumbersome processes like money orders and check cashing from the merchant, making his life easier and his customers happy."
