K.V. MART ROLLS OUT PREPAID SERVICES

LIZA CASABONA

CARSON, Calif. -- K.V. Mart here recently completed a rollout of coin counting machines with added prepaid services in all 20 of its stores in Southern California.

Prepaid MasterCard, prepaid wireless phone cards and payroll card services were added to Bellevue, Wash.-based Coinstar's coin-counting kiosks last summer, according to company sources. K.V. Mart installed the new machines in place of older coin-counting machines that it had in place chainwide.

"It's too early to tell, but people are starting to buy the prepaid MasterCard and the prepaid wireless cards. It's just now getting off the ground," said Greg Sproul, chief financial officer, K.V. Mart. "The customers really do seem to like it, especially the prepaid MasterCard because a lot of our customers don't have banking relationships established to get a credit card. This is a really easy way for them to get one."

The chain has seen a boost in use of its services in recent months as well, since Safeway, Pleasanton, Calif., removed its Coinstar machines and installed other hardware, Sproul said. Safeway-owned Vons stores are prevalent in the markets K.V. Mart serves. "We have seen an increase in use of our machines [since Safeway switched its coin-counting machines from Coinstar] because we are able to offer more on these machines than the ones at Safeway," he said. Customer reaction to the increase in services has been positive thus far, Sproul added.

"K.V. Mart is an innovator in its market and was very quick to adopt ahead of the curve," said Richard Stillman, president, Coinstar. "They are really benefiting from getting to the marketplace first with these solutions for grocery stores."

K.V. Mart's market is primarily low-income, Sproul said, making the prepaid MasterCard and phone cards especially attractive since many of the customers don't have prior banking relationships.

The Truth Prepaid MasterCard card allows consumers to pay-as-they go, according to information provided by Coinstar. The cards can be dispensed and refilled at Coinstar Centers and are good anywhere MasterCard is accepted, including ATMs. There is a $9.95 fee for new account activation and $4.95 for reloads.

The prepaid wireless airtime is accepted at most wireless providers, and fees for using the service vary according to carrier. The Payroll Card Services offered allow anyone whose employer issues the cards to do balance inquiries and to get wage statements printed at Coinstar kiosks. There is no charge for this service.

The electronic services offered on the Coinstar Centers fits well for K.V. Mart as customers get more comfortable using kiosk machines, Sproul said. The retailer's stores also have switched to electronic benefits transfer as opposed to paper food stamps, he added, so customers are being increasingly encouraged to use self-service machines. K.V. Mart installed Coinstar's coin counting machines in 1997 and rolled out the new services over the last few months. Since its inception the store has processed more than $20 million in coins, Sproul said.