Thirty kiosks set up at DTE payment centers as well as some Rite Aids accept all forms of payment, including cash, from everyone, including those who might not have a credit card or bank account
Being poor can be expensive, so a local data processing company is rolling out a payment system that could be a money-saving model for low-income consumers.
At its root is a well-worn technology familiar to most: an ATM-style kiosk. This one, designed by Ferndale-based DivDat for DTE Energy, doesn’t dispense with money.
The 30 kiosks placed at DTE payment centers and select Rite Aid pharmacies in locations around Detroit and Michigan accept all forms of payment, including cash. The targeted customer is someone who may not have a credit card or bank account.
The goal, according to company officials, is to make it easier and cheaper for the poor to pay their utility bills.
“We think of kiosks as a smartphone,” DivDat President and CEO Jason Bierkle said in an interview.
The use of the kiosks is free. This allows customers to avoid additional surcharges often levied by party stores and other authorized payment sites, including grocery stores, which facilitate cash payments. Some of these third-party vendors can charge up to $3 each time a customer pays a bill, executives say.
With kiosks placed near the homes of people who traditionally use cash, the utility hopes to increase the chances that its less well-off customers will pay their bills in a timely manner.
Early returns are solid, according to company executives. Of the utility’s 200,000 walk-in payment transactions, 25,000 used a DivDat kiosk last month. The use of its kiosks increases by 10% to 15% from one month to the next. Over 90% of customers who used the kiosk once used it again.
Nearly one in five Detroit residents are considered “unbanked,” the second-highest rate for a major city in the nation, according to data released last week by the Washington-based Corporation for Enterprise Development. a nonprofit advocacy group for low-income consumers.
Across the region, 30% are also considered underbanked, or households that have a bank account but continue to use alternative and often expensive financial services such as payday loans or pawnbrokers, the group found. .
For Bierkle, the goal is bigger than Michigan.
“We want to eliminate convenience fees nationwide,” he said in an interview at Ferndale headquarters for DivDat, short for “diversified data.” “We don’t think that’s fair.”
He imagines a future of conveniently located kiosks where customers could pay various bills, from water to electricity to telephone, in one place at no cost. Unlike a payment center, these kiosks would be located in retail stores like Rite Aids which are open nights and weekends.
A separate trial program at several area churches is also underway, he said.
The growing use of fundraising kiosks in Michigan comes as the Obama administration launched a new initiative last week to improve access to banking services for millions of Americans who currently do not have a bank account. current or savings account.
“For many, it’s hard to imagine how it would be possible to manage financial affairs without basic commodities like a checking account or a credit card,” Treasury Secretary Jacob Lew said in an announcement on Tuesday about new efforts. public-private to reach low-income people. populations. “But the consequences of exclusion are real, and expanding access to financial services is important at all levels of the global economy.”
The recent financial lending crisis and recession have highlighted the potential dangers for consumers shelling out higher rates and fees to access last-minute credit. According to Lew, millions of Americans don’t have enough of a financial history to receive a credit score, which can unlock traditional forms of lending.
Bierkle says DTE customers are already using the blue and gray kiosk in a number of ways its creators didn’t necessarily anticipate.
Some customers pay their bills in advance to ensure they won’t lose service if times get tight. Others pay a little at different times of the month.
Ted Williams, 61, who lives on the east side of Detroit and works in inventory at Ford, said he used the kiosks at DTE payment centers when the lines got too long or at a Rite Aid near the city airport when he stopped to pick up a prescription.
“It’s very easy to use,” Williams said. “I’m waiting for the last minute to go deposit my check.”
Caregivers, including parents of children living away from home and adult children of elderly people, are also using the system to pay bills remotely for others.
There’s also evidence, Bierkle said, that millennials in some cases prefer cash, which makes the kiosk appealing beyond those who may not have a bank account or credit card.
But there are still hurdles to overcome to take the company beyond its beginnings.
“We have two challenges,” he said. One is to raise awareness of the availability of kiosks and the other is to reduce concerns that installing kiosks will mean laying off customer service employees.
For Bierkle, the kiosks are a natural evolution for the family business that began in early 1971 as a data processing business. Later, he developed a variety of bill payment services for businesses that moved from mail to faxes to the Internet.
DTE looked for a partner in 2012 for the kiosk idea and eventually found DivDat. DivDat charges DTE to operate the kiosk and the bill payment company rents space from local Rite Aids in addition to kiosks stationed at DTE payment centers.
“I consider it a smash hit,” Ronald Gillmore, newsstand program manager for DTE, said in an interview.
The program raises about $3.5 million per month for the public service.
“We’ll probably look at expanding the network,” Gillmore said. DTE has 2.1 million electric customers and 1.2 million gas customers (and some overlap), the company said.
It can still be difficult to persuade some older customers to adapt to new technology, Gillmore said. But once they do, most become repeat customers, he said.