TIO Networks is building a network of partners to deliver automated cash-based financial services across the US. Robin Arnfield reports


From its base in Vancouver, Canada, TIO Networks operates a network of 59,000 clerk-assisted terminals and self-service kiosks that enable consumers to use cash to pay bills and purchase other financial services at the point of sale. The network says it supports some 10,000 billers including cable TV companies, utility companies such as Texas Power, and fixed and wireless telcos such as Qwest and MetroPCS.

The kiosks are located in convenience stores and large-scale “big-box” retailers across the US. The company’s network received a big boost in February 2011 when TIO added 35,000 MoneyGram agent locations across the US, including MoneyGram branches at Albertsons, CVS Pharmacy and WalMart stores.

TIO targets the 60 million individuals who comprise the unbanked and underbanked segments of the population. These consumers rely primarily on alternative financial services providers for cash-based bill payment, reloading prepaid debit cards, cross-border remittances, and prepaid cellphone payments. According to the U.S. Census Bureau, Hispanics, the largest segment of unbanked and underbanked consumers, will account for 25 percent of the US population by 2050. Reflecting TIO’s focus on the Hispanic market, “tio” means “uncle” in Spanish. “In Latino culture, your uncle is someone who takes care of you,” says Joseph Nokhla, TIO’s chief operating officer.

In addition to domestic bill payments and mobile airtime top-up, TIO’s kiosks also offer reloading for NetSpend and Visa ReadyLink prepaid cards, and cross-border bill payments, mobile top-up and remittances to Latin America and the Caribbean. Remittances are offered through a partnership with Nexxo Financial, which has 35,000 cash payout locations in Latin America. Payment of Latin American bills from the US is offered through a partnership with IPP of America and iSend.

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In 2010, TIO also launched a mobile phone bill payment service in Canada for start-up Canadian wireless carrier Mobilicity using web-connected PCs in Mobilicity dealers’ stores. “We are also providing mobile phone bill payments for several other new Canadian mobile companies,” Nokhla says.



To increase its geographic footprint, TIO is launching a programme to engage independent service organisations (ISOs). “TIO’s aim is to get ISOs to install its self-service kiosks next to their ATMs,” says Nokhla.

In its marketing to ISOs, TIO refers to its kiosks as “reverse ATMs,” because they accept cash, by contrast to ATMs which dispense money.

But TIO’s self-service kiosks are more expensive than the low-level ATMs ISOs typically install. “We’ve been working with our manufacturer partners to lower the hardware cost of the kiosks, and we also plan to offer leasing as an alternative to purchase,” says Nokhla. “Our goal is to offer kiosks to ISOs for under US$3,500, which will reduce their payback period compared to the current generation of TIO kiosks that cost between US$5,500-$6,000. Standard ATMs deployed by ISOs cost under US$2,000.”

“ISOs realise that the margins per ATM transaction are falling, while financial services kiosks have healthy margins,” Nokhla says. “Also, if an ISO installs a financial services kiosk in a retail outlet, they are giving the merchant something value-added that will bring people into the store.”

“Convenience stores and cheque-cashing outlets are attracted to self-service kiosks as they drive business into the store, resulting in incremental sales in addition to receiving a share of the ISO’s revenue from bill payment transactions,” says Dave Lott, senior vice president at US consultancy Speer & Associates.



For its financial year ending 31 July 2011, TIO had revenues of CAD36.6 million ($35.24 million), up 32 percent from CAD27.8 million in FY 2010. Revenues rose by 21.9 percent to CAD10.37 million in the first quarter of FY 2012 ending 31 October 2011 from CAD8.51 million in the year-earlier quarter.

In the first quarter of FY 2012, TIO processed 4.3 million transactions, up from 4.1 million in the fourth quarter of FY 2011 and 3.6 million in the first quarter of FY 2011.

Although it does generate some revenues from hardware and software sales, and from professional services, 98 percent of TIO’s revenues are derived from transaction services. It charges consumers a convenience fee of between $2 and $5 per transaction, of which it remits a portion to its biller clients. “The average fee is around US$2.50,” says Shahbazi. “The vast majority of our transaction fees are generated from consumers, although we do charge billers in a number of cases.”

The main challenge facing TIO is to increase its number of billers. For the year ending 31 July 2011, bills processed on behalf of two bill payment partners – wireless operator Cricket, and AT&T – accounted for 87 percent of TIO’s revenues. “Such a large concentration of its business with two billers poses a substantial risk to TIO, should that company terminate the relationship,” says Lott.

Nokhla says that TIO is expanding in the utilities sector and is also marketing its bill payment services to US local and state government for tax payments. “I don’t think there is a single US utility, mass biller, municipal council or county that is not considering kiosks as a payment method for their customers,” he says. “But I wouldn’t have said this two or three years ago.”



In February 2011, TIO launched a mobile bill payment app on behalf of Californian utility Pacific Gas & Electricity (PG&E), and according to a report by Canadian stockbroker NCP Northland Capital Partners, TIO is developing a generic, multi-biller, downloadable mobile app for launch in FY 2012.

Following the launch of its mobile channel, TIO has started offering consumers a PIN-protected account where they store their TIO transaction history. “We have 75,000 consumers enrolled as TIO Consumer Cloud (TCC) members,” says Shahbazi. “Once a consumer has created a TCC account on their smartphone, they are able to view it on any TIO channel that they access,” he says. “This gives us useful demographic data.”

“TIO uses the same processing engine for all its channels including the web, mobile, POS terminals and kiosk,” says Nokhla. “We tell our billers that, once they have carried out the back-end software integration to our platform for kiosks, it is easy to add our other channels.”

The TIO web and mobile channels accept payments from credit and debit cards as well as direct transfers from bank accounts. Consumers can also use their credit and debit cards at TIO-connected kiosks and clerk-assisted terminals.