Cashing In on the Unbanked

Finding the right mix of financial services is key, retailers agree

Samantha Oller, Senior Editor/Fuels, CSP

LAS VEGAS -- The Las Vegas Strip provided the perfect backdrop to CSP's recent Fringe Banking & Unbanked Consumer Dialogue. Beyond the obvious connectionmoney is the end goal for both gamblers and unbanked consumersthere is also the attempt by both casinos and financial-service providers to provide their customer with the ideal combination of means to get at it.

Of course, none of the dozen retailers at the meeting felt they were gambling in their efforts at targeting the unbankedestimated at 80 million consumers who, for whatever reason, do not [image-nocss] have a bank account or limited creditbut none of them professed to hitting the jackpot, either.

Considering that a full financial-services program includes a half-dozen if not more offeringsbill payment, prepaid debit cards, money transfers and money orders, payday and micro loans, ATMs and stampsit's not surprising that most of those at the roundtable rated themselves a 5 or less on a scale of one to 10, with 10 having the ideal offer for the unbanked consumer.

Employee training, dedicating space and labor and figuring out the operational details were some of the main hurdles discussed.

But for every five retailers that are still trying to figure out the initial pieces of their programmoney transfers tend to be one of the first stepsthere is one that has found its footing. R.H. Smith Distributing Co., Grandview, Wash., an operator of 13 c-stores and supplier to 50 dealers, opened a check-cashing business about a half-mile from one of its c-store locations due to overwhelming demand.

Customers are coming to our locations to do many things, said Ljubomir Medenica, director of business development, and we're now thinking about how to use that experience in building new stores.

Meanwhile, Western Refining's recently acquired Giant Industries subsidiary has found particular success with Mr. Payroll check-cashing kiosks, which are installed at 35 of its stores. Mike Polo, vice president of retail marketing, noted that 90% of customers who cash their checks at one of his stores also buy beer and soft drinks while there.

Suppliers also have a role in whether or not a financial-services program takes off. You've got to have a service provider who knows what they're doing in this space, said Keith Brand, president of Tefisto Partners, Tempe, Ariz., and the main presenter at the roundtable. This becomes especially critical for retailers who are still feeling their way to a complete offer, since their category partner will likely become their category manager for those first years.

And suppliers can go beyond the kiosk or prepaid card business. Town & Country Food Stores, San Angelo, Texas, leased space to a local bank next to its Midland location. A vestibule, which separates the c-store from the bank, contains a bill-pay and check-cashing kiosk funded by the bank. It's a partnership that will allow us to gain in-store sales and learning, said Nick Ramos, merchandise manager.

It has tough being first, Brand told attendees, but added, don't be afraid to copy the leaders in this industry.

Leaders outside the industry are worthy models, as well. Wal-Mart's new Money Center concept, which offers such services as check cashing, money orders, bill payment and money transfers, was held up as a considerable competitive threat. Even here, c-stores have the advantage thanks to their convenient location, Brand argued, but they must have a winning offer inside the store to win the unbanked consumer's business.