The Green Sheet Online Edition
October 12, 2009 • Issue 09:10:01
Empowering the cash-compensated
In low hourly wage jobs like tending bar and waiting tables, workers rely on tips to make a decent living. But with pockets full of cash at the end of shifts, workers are prone to squandering it. Doug Lindstrom, co-founder and Chief Executive Officer at Point of Wealth Systems Inc., knows the temptation firsthand.
With over 20 years of service as a bartender, Lindstrom estimated that if he had put aside just 5 to 10 percent of his earnings per shift over the years, he could have saved $40,000 to $60,000. Instead, he spent it. One of his professed weaknesses was video poker, legal in Oregon and easily accessible where he tends bar.
Thus, Lindstrom recognized a need among the cash-compensated for a way to funnel money into more productive pursuits. PWS' solution is called the Point of Wealth Register (POWR). It is a free-standing or wall-mounted bill-accepting kiosk that allows employees to deposit tips at job sites, before they have a chance to spend their cash.
Users deposit cash into the register for allocation to bank, retirement and prepaid card accounts, to charities, and for the paying of bills. PWS charges users 50 cents for a bank account deposit, $1 for bill pay and $2 for loading a Visa Inc.-branded, open-loop, reloadable prepaid card. According to Lindstrom, deposits to charities are free, with 100 percent of the funds going to the organizations.
As deposit-only machines, users sign up for the service online, where they set up accounts to which funds can be directed, and then input a username and PIN number to access the machines. When users deposit funds at the registers, the POWR system electronically forwards the funds to the appropriate institutions and prints out receipts for users.
Linstrom said the first register will be installed in the 21st Avenue Bar & Grill in Portland, Ore., where he works when he's not wearing his PWS CEO hat. That register is called a hub unit because of its central, high-traffic location within the establishment. Since the bar, located in Portland's entertainment district, caters to other waiters and bartenders, Linstrom believes the register will be used by bar patrons as well as the bar's own workers.
"It is so wide open for where these machines would go," he said. With 13 million workers for 1 million bars and restaurants nationwide, he estimates the cash compensation market at $50 billion a year. "We only need 2 percent of market penetration to meet our five-year goal, which means 20,000 machines," he said.
While PWS is focused on installing the machines in eating and drinking establishments, grocery stores and taxi cab companies are ripe areas for future expansion. Cab drivers typically end their shifts with large amounts of cash. "If you're talking big cities, you're talking about thousands of cab drivers with hundreds of dollars on each one of them," Linstrom said.
As for supermarkets, some get as many as 2,000 shoppers a day, he noted. A percentage of those patrons are considered unbanked or underbanked - an overall population estimated at 47 million in the United States - who could utilize the register for prepaid card loading, bill pay and online purchasing.
Prehn said the line between the unbanked and the cash-compensated is blurred, since a percentage of the unbanked are also cash-compensated workers. With the POWR registers, "they can get rid of the cash on the spot," he added. "And we know that for 50 cents, or a buck, or a buck fifty, all the research we have done, people are like, 'Oh, yeah, that's actually not a barrier.'"
What is more, bars enjoy additional cash resources - something that bars, with their cash heavy transactions, are always happy to have. Prehn said when workers deposit funds into the machines and that money is directed where users want it to go, employers' accounts are actually debited those amounts. But the employers are compensated by owning the money in the registers - money that businesses simply add to their nightly deposits.
Ringing it up
Prehn sees three main benefits to the POWR. It is a convenient way for users to manage their cash; it helps communities with donations to charities; and, perhaps most importantly, it fosters positive financial decisions. "That is really, really what we are trying to do," Prehn said. "We are trying to help [workers] become more financially responsible and independent."
PWS unveiled the POWR at the DEMO Conference held in San Diego, Sept. 21 through 23, 2009. Linstrom and Prehn called it a "home run" as a showcase for the register, which was subsequently mentioned in USAToday.
In the next 90 days, PWS expects to have the first registers installed in the Portland metropolitan area. To expand, the company is looking to employ sales professionals with experience selling services in the bar and restaurant vertical markets. For more information about this opportunity, contact Prehn at 503-890-3931, or e-mail him at email@example.com.
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