Brands like Amazon Go, Zippin and Trigo Vision have made digital-only payments key pieces of their efforts to innovate unattended retail experiences. In doing so, however, they’re inadvertently leaving low-income, unbanked and underbanked customers behind.
Approximately 14.1 million American adults – or 8.4 million households – were unbanked in 2017, and about 66 percent of these households paid their bills in cash. Cities and states are aware of this and are making sure retailers are, too. The state and municipal governments of New Jersey, Philadelphia and San Francisco all recently imposed bans on brick-and-mortar stores that do not accept cash payments. Cashless shops may be speedy and lucrative, but retailers risk alienating their customers if they assume everyone can or wants to use card-based or other digital payments.
Extending unattended retail access to underbanked customers was a key focus for Chicago’s Department of Finance when it began installing self-serve kiosks in 2007. Citizens can use these machines to pay for everything from parking tickets to utility bills – and while a variety of payment methods are available, the city found cash was the most desired.
In a recent interview with PYMNTS, Tina Consola, first deputy director of Chicago’s Department of Finance, explained in greater detail how the city ensured accessibility and security at kiosks where high-value payments are made.
Chicago currently has 18 kiosks throughout the city at community centers, payment centers, police stations and one library, and transactions are typically completed within a minute. While payments can also be made with credit cards and electronic checks, cash is a clear favorite. Consola said hard currency comprises 47 percent of all kiosk payments, with credit cards close behind at 43 percent.
“Since the beginning, cash has always been most popular at the kiosks,” she noted. “It’s important to serve customers who primarily pay in cash, because they may not have access to a checking account or credit card.”
Kiosk payments are sizable, with the average user feeding anywhere from $50 to $1,000 into a machine depending on the bill or ticket. They represent only 1.5 percent of the city’s transactions, however. Most payments reach the city by way of staffed centers, autopay services and online transactions. Unbanked residents represent just 6.9 percent of all Chicagoan households, but they are still a very real portion of the population that needs and benefits from the availability of cash payments.
Security and Fraud in Bill Payments
Accepting cash is imperative when it comes to meeting the needs of unbanked and underbanked customers, but it does come with security challenges. One way the city handled these issues was by placing kiosks in secure public buildings where staff can monitor the machines and users. This also provides a layer of security for the vendors who withdraw cash from machines for deposit into city bank accounts.
“We want kiosks to be in areas that are accessible to our customers, but also safe,” Consola said.
Cash payments certainly present risks, but so do those made by cards. Kiosks must be able to protect against bad actors looking to use others' credentials to pay off parking tickets or test stolen credit cards. The city safeguards against such attacks by limiting the number of daily payments that can be made by the same account and restricting certain kinds of transactions. It has also partnered with credit card processors, analyzing data to assess the risk of transactions and enabling officials to block payments made via cards that were previously used in fraudulent transactions.
“We don’t allow payments at kiosks for booted vehicles, because those are more likely to have a fraudulent component,” Consola explained. “When motorists are booted, they need to make a payment to retrieve their vehicle. There are certain people that actually target these payments for using stolen credit card or bank account numbers. … If they know the card’s zip code and CVV, they can use it at the kiosk. … There’s not anyone checking identification.”
Chicago continues to improve upon its kiosks, with forthcoming features that will make services more accessible to people with disabilities. There are also plans to install more machines, especially in places that are accessible 24/7.
As lawmakers push for inclusion of unbanked and underbanked consumers, innovative retailers would be wise to focus on providing secure, self-serve models that embrace a wide array of payment options – cash included.