Magazine Article | July 1, 2003

Switch To Higher Profits

Source: Innovative Retail Technologies

By rolling out self-serve financial and payment services kiosks at more than 1,000 locations, 7-Eleven found its biggest hit since "Heaven Sent" hosiery.

Integrated Solutions For Retailers, July 2003

When you think of c-stores (convenience stores), there are probably a few names that come to mind. If you compare lists to someone else who was asked the same question, the one c-store you would inevitably have in common would be 7-Eleven (Dallas). 7-Eleven is the leading c-store retailer with nearly 5,800 stores in the United States and Canada and 19,000 licenses in 17 other countries and U.S. territories.

What separates this c-store from many others is not that it necessarily sells the c-store staples - tobacco, beverages, and gasoline - cheaper than its competitors; rather, it's 7-Eleven's innovative way of servicing customers. Leading up to the 2000 presidential election, for instance, 7-Eleven decided to have an unabashedly unofficial, unscientific poll by adding red, white, and blue coffee cups endorsing Republican candidate Bush or Democratic candidate Gore. Those who were undecided could choose the regular, "nonpartisan" cups.

Besides the presidential election idea, 7-Eleven introduced the "Heaven Sent" hosiery - pantyhose in a lipstick size container that fits conveniently in a woman's purse. And, let's not forget Mountain Dew's Blue Shock, a beverage unavailable anywhere but 7-Eleven.

In 1998, the c-store giant launched another innovative idea that has furthered its success. 7-Eleven calls its latest innovation Vcom (for Virtual commerce), a Web-enabled kiosk that offers ATM capabilities and 24-hour, touch screen financial and other services including multiple payment methods on a single device. 7-Eleven developed the Vcom services in partnership with American Express, Western Union, Verizon, Certegy, Public Access Insurance, and Cyphermint among others. "Our goal was to target the 'unbanked,' 'under-banked,' and unwired segment of the population," says Brady Giddens, director of new product and business development for the Vcom kiosk program. "In 1998, we partnered with NCR and an integrator to do a proof of concept in 37 stores in Austin, TX. The results were so positive that we decided to add more partners to our offering and roll out the kiosks to more stores."

Multiple Services On One Touch Screen
The Vcom kiosks enable Verizon customers to pay for bills using checks, cash, or major credit/debit cards. Additionally, the touch screen units accommodate money transfers, money orders, and, by the end of June 2003, quotes on auto insurance rates.

By the end of 2002, the retailer had installed nearly 700 Vcom kiosks, which helped handle 100 million ATM transactions and $4.5 billion in money orders. The c-store retailer presently has rolled out 1,000 kiosks and has plans for an additional 2,500 more implementations beginning at the end of 2003.

The Secret Behind Multiple Transaction Success
Besides partnering with the right financial services partners, Vcom credits its success to building its kiosks with a solid infrastructure. "At the heart of the kiosk is Mosaic Software's [Deerfield Beach, FL] Postilion transaction routing and switching software," says Bill Sass, system manager for Vcom. "The software solution enables us to route all kiosk transactions to the appropriate place and add new services without having to worry about various integration requirements." Each of the kiosks is equipped with Mosaic Software's eSocket.atm, which is a Java-based software application that serves as an interface among Vcom's partners and the centralized Postilion switch. Each of the kiosks uses either a 56k frame relay or T1 connection to 7-Eleven's data center in Dallas. At the data center, a Postilion switch intercepts the kiosk message, routes the request to the appropriate service provider, and acts as the single settlement point for the returned message. The Postilion solution maintains transaction integrity by logging each leg of a transaction between the customer, various product suppliers, and financial networks and verifying the success of the transaction. In the event that a transaction cannot be completed, Postilion automatically generates the required reversals and adjustments. The information logged in the database is also used for automated settlement and reconciliation between the various parties and for generating reports.

Besides serving as a payment-processing provider, the Postilion solution monitors hardware status and checks for system connectivity. If a component requires attention, the system automatically generates an alert to the appropriate serviceperson via pager or cell phone. Also, with the help of an HP Pro Curve virtual LAN, the system is able to detect unauthorized users - called sniffers - trying to get into the network and automatically lock them out of the system.

Besides rolling out more Vcom units at its stores, 7-Eleven plans to add more online shopping functionality to its units down the road. With the success it has had thus far with its kiosk rollout, it may be called upon to use its kiosks to accommodate the next presidential election.