HalCash North America is targeting unbanked and underbanked US consumers with its Pin4 cardless ATM service in partnership with remittance firm Viamericas. In addition to cashing out P2P transfers, Pin4 can be used for redeeming promotional offers at ATMs, Robin Arnfield reports
Pin4 offers real-time cardless cash-outs of up to $500 at ATMs from digital wallets, bank accounts, P2P transfers, digitally-scanned cheques, small dollar loans, and reward, rebate and loyalty offers. "Customers can use any type of cellphone, not just smartphones, to receive SMS messages containing Pin4 security codes," says Richard Witkowski, HalCash North America’s CEO. "Our system works with any make and type of ATM, and ATMs just need a software download."
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Pin4 order recipients don't need bank accounts to use Pin4. What happens is that a Pin4 order supplier, for example a money services business (MSB) sending remittances, sends the recipient an SMS containing a PIN.
In addition, HalCash sends a four-digit secret code to the recipient which the sender doesn’t know. To withdraw their cash, recipients must enter both PINs and their cellphone number at a Pin4-enabled ATM. The SMS they receive from HalCash has a link to a global GPS app that shows them the nearest Pin4-enabled ATM to their location.
Pin4 transactions are surcharge-free for recipients withdrawing cash from Pin4-enabled ATMs. "The ATM owner receives a share of the fee we charge the issuer of the Pin4 order, be this a retailer, rewards scheme or MSB," Witkowski tells CI.
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By GlobalDataThe Pin4 technology was originally developed in Spain by five Spanish banks to provide a convenient method for their customers to send cash to their friends and relatives. The banks – Abanca, Bankinter, Banco Popular, Cajamar and Caja Laboral – formed a Madrid-based company called HalCash International (HCI) to roll out their platform in Spain and internationally.
HalCash North America has licensed Pin4 from HCI, which has also licensed Pin4 operations in Poland, India and Morocco.
Alliances
In February 2016 HalCash began working with its first US ATM network partner, Louisville, Kentucky-based Payment Alliance International (PAI), to Pin4-enable PAI’s 70,000 ATMs.
HalCash also has a US promotional rewards partner which works with three out of the top five US health insurers. "These insurers reward their customers for healthy behaviour like joining a gym, by sending them prepaid rewards cards, and they're interested in using Pin4 instead of mailing prepaid cards," says Witkowski.
HalCash’s MSB partner is Bethesda, Maryland-based Viamericas which offers remittances to Latin America, the Caribbean and Africa. The International Finance Corporation (IFC), a member of the World Bank Group, is Viamericas’ largest institutional shareholder. With Viamericas, HalCash is initially focusing just on domestic US P2P transfers, primarily for unbanked and underbanked consumers.
The US annual P2P payments — informal payments made from one person to another by cash, cheque, digital money transfer or other means— is estimated to have reached over $540bn in 2014. These payments were made by cash, check, digital money transfer, or other means. HalCash cites the Federal Reserve System’s Cash Product Office saying that cash stands as the preferred method of payment for purchases and bill payments even within the digital transaction environment.
Rollout
“It took us longer than anticipated to get PAI’s ATMs Pin4-enabled primarily because of EMV upgrades at their ATMs,” says Witkowski. “Over the last three to four months, we’ve made reasonable progress, and now have Pin4-enabled ATMs in 46 US states. We’re now bringing on 5,000 PAI ATMs a week into our network.”
“In our business model, in addition to having Pin4-enabled ATMs in 46 States, there needs to be saturation of Pin4-enabled ATMs in specific local markets so consumers can easily find ATMs to withdraw their remittances,” says Witkowski. “With PAI we’ve identified 15 markets in the US which are the 15 cities that give us the best opportunities for revenue generation with our P2P transfer partners and our promotional partners.
We looked at the existing MSB businesses in those 15 markets in terms of the number of their payout outlets, and put together a network of ATMs in those areas that will exceed the number of MSB offices available there.”
This strategy means it will be more convenient to get cash from Pin4-enabled ATMs than to look for an MSB payout office, Witkowski says.
HalCash is currently focusing on “friends and family” users of Pin4, and expects commercial rollout to occur in early 2017. “As we’re now available in 46 States, we’re letting our partners use our distribution network to get people more interested in their business model, for example through pilots. We’re not pushing local promotions in big cities yet until we feel confident there are enough Pin4-enabled ATMs in those cities to serve the marketplace.”
Witkowski says PAI has guaranteed to have 20,000 ATMs Pin4-enabled in 15 core markets by year-end 2016. “We’re working with Viamericas to have at least some of the cities that are important to them available for ATM access in December 2016,” he says.
Viamericas
HalCash has integrated Pin4 with Viamericas’ Vianex digital money transfer platform through an API integration. “We rolled out Pin4 to family and friends of our staff in February 2016,” says Paul Dwyer, Viamericas’ CEO. “We anticipate that much of our Pin4 customer base will be migrants and cash-preferred consumers. Initially, with Pin4 we’re just focused on the domestic US market, as there is a huge opportunity here.”
Pin4 could be attractive to millennials as a way of instantly transferring funds, since P2P services such as PayPal use the ACH system and take several days, says Dwyer.
To use Vianex, consumers transfer funds on Viamericas’ Govianex.com website using their bank account or credit/debit card. “For people using Vianex, we’ve added Pin4 to the list of pay-out options that people paying with a card can use,” says Dwyer. “But you don’t have to use payment cards to make Pin4 transfers from one of our agency offices.”
Separate to its Pin4 alliance, Viamericas has launched what it terms “Money Transfer as a Service” (MTaaS). “We have a central processing capability, the licenses to handle money transfer transactions and a global payout network,” says Dwyer. “So MTaaS is a way to make those capabilities available to different categories of partners which have large a base of customers or followers who are likely to want international money transfers as a service. We offer an easy-to-install set of open APIs enabling us to integrate with these organisations’ websites or mobile apps. This saves them having to set up a licensed money transfer operation of their own.”
Unlike MSBs such as MoneyGram and Western Union which only allow senders to specify a recipient country, Viamericas enables senders to specify the payout network in the recipient country that offers the best price and has the most convenient payout locations. “We work with 20 different payout networks in Mexico, for example, some of which are banks and others are retailers,” says Dwyer. “So, whereas MoneyGram and Western Union have a single price and a single exchange rate for the sender, we have variable pricing and exchange rates depending on which payout network the sender selects.”
AML/KYC
In the P2P market, HalCash only works with licensed MSBs, as they have an obligation to comply with AML laws, says Witkowski. "We push the AML/KYC compliance requirements back to our MSB partners,” he says. “Because Viamericas, for example, has stringent AML/KYC controls, we know that, when we get an order from them, they’ve already vetted the sender and recipient. At our end, we verify that the recipient’s cellphone number has the two correct Pin4 codes that were issued to it.”
Dwyer says Viamericas verifies the identity of the recipient before releasing the second, secret Pin4 code to HalCash for texting to the recipient. “We also do an identification process for the Pin4 sender,” he says. “Our verification is risk-based depending on the amount and frequency of sending.”
Digital cheque-cashing
HalCash is establishing partnerships with US cheque-cashing companies to offer digital cheque-cashing. “The partnerships we’re setting up will let consumers scan a cheque into their phone for deposit using a mobile app and, once the cheque-cashing firm has cleared the cheque, they are sent a Pin4 code enabling them to withdraw the funds at an ATM,” Witkowski says. “Once we have the ATM footprint, we can generate a significant number of orders with digital cheque-cashing.”
Witkowski says that, by the end of 2016, HalCash will be announcing a new ATM partner which will add a significant number of ATMs to its ATM footprint. It will also be announcing two additional P2P partners, one of which is very focused on international remittances, and two new loyalty partners.
Loyalty
The advantage of using Pin4 for redeeming offers is that consumers don’t need to wait for cheques or prepaid rewards cards to arrive in the mail, says Witkowski.
“For our sister HalCash companies in Spain and Poland, cashing out rewards and promotions represents the major share of their transaction volumes,” says Witkowski. “These two networks have seen a 30% to 50% increase in their promotional market volumes.”
HalCash brand promotion clients in Europe include Coca Cola, Pepsi, Bacardi and Nestle.
“We initially thought there would be a large promotional weight to the Pin4 orders we would be putting out,” says Witkowski. “In fact, our digital cheque-cashing and MSB business are much stronger than we anticipated, and we’re currently evenly weighted between the P2P side and the promotional/loyalty side of our business. However, we’re having a lot of conversations with loyalty providers.”
