CashOut™

CashOut™

How to use Secure Digital Vouchers to make cash payments & other credits to customers.

Background

Many companies need to make small to medium value payments (£1 to £100) to their customers for a variety of reasons:

  • Utility companies are choosing to pay customers cash loyalty bonuses rather than incurring the high costs of recruiting new customers to replace those lost by “churn”
  • Services now exist for consumers to sell items back to companies like mobile phones, other electronic goods, jewelry and so on
  • Gaming operators can encourage players to use their services rather than a competitor’s service by offering a fast and convenient method to liquidate their winnings
  • Vending machine operators need to reimburse customers when their machine “eats” their money
  • Participants in consumer surveys can be encouraged to take part for modest cash incentives
  • Consumer goods manufacturers may prefer to offer a prompt cash refund for a defective product rather than incur the time and expense of sending a replacement or may want to offer “instant cash prizes” as part of a sales promotion.
  • Bank and credit card customers need emergency access to their funds if their cards are lost or stolen or they need to send cash to family members quickly and securely.

Although appealing and simple in principle, the reality of making such payments is anything but.

For many years, cheques have been the preferred method but this comes at a high cost to businesses and consumers. For a consumer to see any benefit from a payment made by cheque, they must pay the cheque in and their bank account must be within any agreed overdraft facility otherwise the customer will not see the benefit. Lastly, a customer needs to be in physical possession of a cheque in order to present it making cheques fundamentally unsuitable for payments when time is of the essence

For the business itself, the cheques need to be printed to standards laid down by the banking industry before being mailed to customers. Once presented, they incur banking charges and although a cheque is ostensibly valid for six months, cheque clearing systems do not validate the date of presentation and so an ongoing provision needs to be made for this liability.

Such is the cost and relative inefficiency of cheque payments, in December 2009 the UK Payments Council announced 31 December 2018 as the target date for cheques to be phased out with overall volumes set to decline dramatically before this date.

And lastly, while it is possible to send cash through the post, this is insecure and rarely worth the time and aggravation for small amounts – let alone the manpower, stationery and postage cost.

A new approach to making cash payments

PayPoint and Payzone are the UK’s two largest local payment networks. i-movo, market-leading providers of Digital Voucher services, has devised an innovative method of using existing technology installed by PayPoint and Payzone in retailers across the UK to validate digital cash payment vouchers.

With over 43,000 locations across the UK and their retailers typically open 7 days a week and up to 15 hours a day, i-movo CashOut offers a convenient local service to consumers that drives footfall for retailers, it is proven to be attractive to consumers and gives issuers complete visibility and control of their payments.

The pricing model is flexible and can be used for payments up to a maximum of £100. The vouchers themselves are represented by mobile phone text messages, emails or letters. Among the many benefits are improved customer satisfaction leading to higher levels of retention. In addition, the service can offer savings up to 44% compared to cheque payments but with instant visibility of engagement by consumers, right down to the outlet level.

Lastly, all payments are validated in real-time so there is no risk of making duplicate payments and all attempts of multiple payments claims are tracked down to the individual and retailer level.

Making payments in this way that can be cashed without an account is viewed by the UK Financial Services Authority (FSA) as a ‘Money Remittance’ service and so is a regulated activity under the Payment Service Regulations of 2009, subsequently amended in 2011. Consequently, i-movo is registered with the FSA as a ‘Small Payments Institution’ having satisfied the FSA that the operational and technical processes of CashOut meet the standards required to safeguard the payments being made.

Activation & Management

Clients can generate CashOut vouchers for their customers by three different means: Instant, Batch and Bulk:

  • Instant means an electronic call is made to the i-movo system with the customer details and the value, and a CashOut voucher is distributed immediately, usually by text-message
  • Batch means a file is generated by the client of customer details and values. This file is picked up automatically by the i-movo system at a set time – or times – during the day.
  • Bulk generation requires a file is supplied of all the customer details and values and the voucher numbers are generated in advance, ready for distribution by any means.

CashOut vouchers can be distributed to customers by three types of media:

  • Text Message vouchers appear as a unique voucher number in an SMS message. The SMS message can contain simple instructions and even a link to a barcode version of the number plus detailed instructions, branding and a storefinder.
  • Email vouchers can appear as simple text or containing a barcode to be printed and taken to a PayPoint or Payzone outlet for scanning. Emails can contain detailed instructions and branding and are cheap to distribute if you have the relevant addresses.
  • Letters contain barcoded vouchers, branding and detailed instructions and benefit from appearing extremely trustworthy and professional. Letters are a common and successful form of CashOut vouchers for those clients who have a verified physical address for their customers.

Finally, various reporting options are available including a daily file of issued and redeemed vouchers together with a new alerting module that notifies the issuer when each voucher is redeemed including full details of time, date and location.

Customer & Retailer Experience

When a CashOut voucher is received by a customer, by any of the means described:

  • They bring the voucher to any of over 43,000 PayPoint or Payzone outlets, mostly newsagents and forecourts and therefore highly convenient locations
  • They read out the unique code to the cashier, or have them scan the barcode
  • The terminal goes online to check the validity of the voucher
  • If valid, a receipt is produced telling the retailer they will automatically be reimbursed by the payment network, and to retain the receipt in the till for reconciliation purposes
  • The cashier takes the amount shown on the receipt from the till and hands it to the customer
  • The same process can be used for energy prepayment top-ups. In this case, the receipt instructs the retailer to apply the value of the transaction to the customer’s energy key or Gascard

Benefits to Issuers

  • Generates footfall to the store and provides spendable currency within the store
  • Strengthens relationship with customers by providing a valuable and popular service to the local community
  • Reduces the amount of cash held on the premises
  • Reduces cash-handling and statement-item banking charges incurred through depositing cash on a regular basis

Benefits to Retailers

In summary, this radically different approach to payments offers companies making payments the following benefits:

  • A single, identifiable fee including all costs
  • Instant, national coverage of 99.1% of the UK population across over 43,000 retailers
  • Positive consumer reaction: CashOut vouchers in trials have yielded a 95% redemption rate in under six weeks with a very low number of customer service calls.
  • Automatic reimbursement of retailers within 6 days without any effort on their part
  • Very fast set-up times with no requirement on store operations other than processing voucher transactions
  • Instant visibility of campaign performance down to retailer level

Benefits to Consumers

“E.ON has now operated two payout schemes with PayPoint and both have been simple and straightforward to get up and running. We were looking for a cost-effective, convenient way to make payments directly to customers and PayPoint’s CashOut service met these requirements exactly. Our customers can cash their voucher at a time and location that suits them and it’s quick and easy for them to do this. Using PayPoint’s CashOut service also meant we had the flexibility of allowing customers to choose whether they would like their payment as cash or as a top-up onto their Prepayment meter – meaning we could offer our customers a payment in a way which suits them.” Kevin Crabb, Commercial Manager, Metering & Industry Management, E.ON Energy

“Our stores have experienced large volumes of CashOut transactions which has been of real benefit to our business. We are earning extra commission for a very time efficient, simple to process transaction. The type of transaction also has the added benefit of customers spending their rebate in-store on bill payments or on other purchases. Even if they do leave without buying anything else, it helps reduce our banking charges. Win win for all concerned!” Scott Partridge, News & Services Manager, Rippleglen

“British Gas was looking for a trusted partner to deliver a rebate to over 600,000 customers. PayPoint’s CashOut service was chosen as it was considered to be both suitable and convenient for the recipients. PayPoint managed the whole process, including the distribution of the vouchers which in turn could be exchanged by British Gas’ customers for cash at any of the 22,500 PayPoint outlets across the UK. We were delighted with the customer feedback, based on the simplicity of the service, convenience of locations and long opening hours, leading to 97% of customers stating they were very satisfied or fairly satisfied with the service” Michelle Little, Propositions Manager, British Gas.

CashOut in Practice

  • Convenience; most urban/suburban UK households are within walking distance of a PayPoint or Payzone retailer
  • Speed; local convenience stores have a fast customer service ethic
  • Access: many convenience stores are open seven days a week for up to fifteen hours a day
  • Open: No need to have a bank or building society account