Last week, Coinstar, the Bellevue, Wash.-based provider of self-service coin counting kiosks, announced it will be introducing a new service that will enable people to directly deposit coins in their checking accounts. The Coinstar Direct Coin Deposit service will be officially unveiled at the upcoming Retail Delivery Show in November.
According to Alex Camara, VP and general manager, worldwide coin, with Coinstar, the company spent a good deal of time talking to its financial institution customers. "They all said coin counting was important to them, but they wanted a way to keep customers in the branch too," Camara says. That is how the direct deposit concept came into being.
Coinstar partnered with First Data's (Greenwood Village, Colo.) STAR electronic payments network to make the service a reality. Users process the coins as they usually do by pouring them into a Coinstar kiosk. Then they are asked if they wish to deposit the coins. If so, users are required to swipe their debit cards and enter their PIN. The coins are then deposited into customers' checking accounts. A receipt is printed at the end of the transaction. Camara emphasizes that Coinstar put much thought into the security of the transactions. The kiosks will have encrypted keypads and the transaction will travel across the networks in encrypted form. Since banks already have the underlying transaction processing infrastructure in place, Camara claims the service can be up and running in a matter of weeks.
The process runs through the STAR Network, but could work with any of the established platforms, Camara notes. "We could have done this with any provider, and we probably will. But we approached First Data because they're large and have the most experience. First Data had the infrastructure in place to deploy this simply. It was a good point for us to start," he says. "All our Coinstar machines are linked to each other. And now we'll link our network to First Data's to route transactions across the two."
The company's newest Madison model machines will sport the direct deposit service. These will ship by year's end, according to Coinstar. Furthermore, direct deposit will only be available on machines in banks and credit unions, not retailer locations. "We have 250 financial institutions using our current machines and most are interested in the Madison models because they have a lower profile [than kiosks installed at retailers]."
Although users will only be able to deposit coins to their checking accounts, Camara says there is no reason why the same service could not be offered for savings accounts as well. "The technology piece of that is not a problem," he states. "But we decided to launch with a simple approach first. So we went with checking accounts."
Camara claims the coin direct deposit service can potentially be a great customer retention and cost-savings play for banks. "[Self-service coin] direct deposit is a way to attract new customers. It's a way to bring people back into the branch. Banks liked the idea," he explains. "It's also a great way to reduce teller costs."