Bridging the divide for unbanked customers

Keep in Touch Systems Inc. (KIT-Systems) provides a package of merchant services that targets specific verticals and aims to bolster a provider's existing offerings, bump up revenue and increase stickiness.

The package includes bill payment, international calling, prepaid and MasterCard Worldwide-branded debit cards, and mobile top-ups. The package is aimed primarily at unbanked and underbanked customers who lack conventional access to similar services. It is used by convenience stores, liquor stores, grocery stores and gas stations.

"These merchant accounts are hard to get because merchants are very busy and savvy in terms of [finding the best] rates, but this gives the seller more leverage to close a deal, makes the merchant stickier and increases retention," said KIT-Systems founder and Chief Executive Officer Gahl Oren.

Brick-and-mortar, virtual capability

According to Oren, the service works with the VeriFone Inc. VX510 and VX570 machines - among the most common, basic terminals providers typically supply brick-and-mortar merchants for free. It will be available with Hypercom Corp.'s Optimum terminals in the coming months; it is also available as a virtual terminal for any merchant that has an Internet hook-up.

"We have a web portal, where the merchant can go to the website if the merchant has a POS system and just log onto our system with a user ID and a password we generate for them," Oren said. "This way they have like a virtual terminal." Oren added that KIT-Systems enable merchants to offer consumers significant perks.

Bill pay

Bill-pay allows customers without bank accounts to pay electric, trash, television, phone and Internet bills, among others, by bringing cash into a KIT-Systems-equipped store and paying the merchant, who then pays the service provider via KIT-Systems.

"Say you have Metro PCS as your phone carrier," Oren said. "Usually you would have to go to one of their authorized dealers to pay the bill, but with us you can just go to the local grocery store."

Prepaid cards

MasterCard-branded prepaid cards can be used by customers to send money overseas and, for those without an existing debit or credit card, to shop online. Customers can also deposit money with a merchant provider and then use their prepaid cards to withdraw that money from any ATM.

"The value to the merchant is letting the customer put money on the card so they don't have to put it under the mattress," Oren said. "Because it's a MasterCard, it's recognized anywhere in the world and works with any ATM."

For customers sending prepaid cards overseas, Oren said there is a global top-up feature that allows buyers to add money to cards remotely. They can also generate a single balance and put it on multiple "companion" cards, allowing more than one person to access the same prepaid account at a time, he said.

Long distance calling

Long distance calling gives customers a cheaper alternative to typical phone company offerings, according to Oren. He said KIT-Systems' prices are equivalent to calling card prices, running as low as two cents a minute. Oren said the costs of long distance calls under the plan often run cheaper than certain domestic calls under some of the plans of major cell phone carriers.

He said the service offers both PIN and PIN-less calling. With PIN-based calling, customers simply dial a PIN with their access number to make a call; with PIN-less calling, customers register a phone number that serves as the authorization, and calls on the account are allowed only from the number specified.

Furthermore, Oren said the service allows callers to retain unused minutes and carry them over to subsequent calls. "With a calling card, if they buy a $5 card and spend $4.50, they can't use that extra 50 cents," he said. "With us, it stays on the phone. So whatever they don't use, when they add more time to the phone, that extra time they didn't use stays on there."

Mobile top-ups

Mobile top-ups, similar to the bill-pay feature, lets customers pay for extra phone minutes without having to travel to an outlet run by the phone carrier.

For mobile, the company also provides a global subscriber identity module (SIM) card that traveling mobile customers can place in their phones for calling and Internet use virtually anywhere in the world, Oren said. He said customers can also purchase a "USB stick," which gives travelers Internet access with a laptop even where there isn't a regular wireless connection.

A user removes the global SIM card from the phone, places it inside the stick, then connects the USB port to the laptop and gains instant hookup through the user's cellular network, Oren said.

"They can use the SIM card in the phone and talk, and then put it in a laptop and get Internet on their computer anywhere in the world," he said. "You don't need to be in a hotel or something for Internet, you could just be on the street."

More merchant control

Oren said the KIT-Services package carries no upfront charge. The company charges different rates on its services as they are used.

On long-distance calling, merchants get about 18 percent of each purchase. He added that merchants decide how much they want to mark up their fees on prepaid and bill pay. "A lot of companies have fixed rates for that, but we let merchants set their own fees," Oren said. "Depending on the competition in his neighborhood, a merchant can maximize his profit by choosing the most suitable fee."

Merchants can fund the KIT-Services package by adding money as they go. Funds are made available instantly to merchants who make an electronic request for them, docked from merchant bank accounts by an automated clearing house payment initiated by KIT-Systems, according to Oren.

"Merchants pay us in advance: they put a $500 deposit; we collect our portion and charge the rest toward what they sell," Oren said. [Funds] are available instantly to the merchant."

Sales rep opportunity

Oren said sales reps may earn money on Kit-Systems merchant services package. On international calling, he said ISOs typically get 3 or 4 percent out of the 18 percent charged to the merchant. "A merchant services provider is used to making 30 basis points, and with this they're taking 3 percent, so it's 10 times more," Oren said.

He said Kit-Systems comes with a "poster kit" of posters, mats and banners that merchants can use to advertise the availability of services in their stores. He added that the process for approving merchants and installing their services packages is as simple as it comes.

"With merchant accounts you typically have lengthy contracts and a long underwriting process - it needs a lot of stuff," he said. "Our sales agent just goes and generates the account himself - and we can even install it for them if they want - and we click approve."

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