Lori Willis, Dir. of Communications,
Schnuck Markets, Inc., 314-994-4602
George White, Coinstar, Inc.
Jessica Taylor, M. Silver Assoc. Inc.
Aug. 12, 2004
No Bank Account, No Credit Card, No Longer a Problem
ST. LOUIS - Prepaid cash cards are fast becoming a new form of currency for millions of adults and teens across America who lack bank accounts and credit cards and now, Schnuck Markets, Inc. and Coinstar, Inc. are making it easy for customers to cash in on this new trend with Truth® Prepaid MasterCard® Cards.
The cards, which look and spend just like regular credit cards, can be purchased and loaded through the newly equipped Coinstar machines now in all Schnucks in the metropolitan area. Once the order has been placed, the purchaser may expect to receive the card in the mail in approximately one week.
"The Truth® Prepaid MasterCard® Card from our Coinstar Center allows Americans, especially those who are without a bank account, access to purchases that traditionally require a debit or credit card," said Rich Stillman, president of Coinstar Inc. "Consumers can replenish funds to better track spending instead of using cash, and obtain a secure form of payment when making purchases. Three out of four Americans walk by a Coinstar Center at the grocery store several times a week, making it a very convenient location to supply and replenish prepaid cash cards."
According to Stillman, cash cards provide purchasing power and a safe place to store and transport money for adults and teens who find it difficult to make online or catalog purchases, cash a check, or pay bills. Pay-as-you-go financial products such as the Truth® Prepaid MasterCard® Card have the potential to achieve mainstream usage due to other applications as well - such as money management and the convenience of having a financial instrument that limits the risk of theft or fraud.
Frank Lennartz, manager of scan data resources at Schnucks, says the system should get a great start as young people prepare to go off to college. "We are always looking for ways to enhance the shopping experiences for all Schnucks customers. We've had a great response to the Coinstar coin counting system and, we are hoping that with the introduction of the prepaid cards, we can take customer service to an even higher level." Lennartz says Schnucks has had great success with its Gift Cards, a variation of this same concept but, limited to in-store use.
Lennartz says the Truth® Prepaid MasterCard® Card cards greatly expand on this concept making electronic payment an option for everyone including adults without credit cards and students, "Prepaid cards, good wherever MasterCard is accepted, offer parents an easy way to introduce their high school or college age students to a first credit card and get them on the way to positive money management habits. They also make good gifts for teens and even younger children. Grandparents, for instance, may consider these cards ideal holiday gifts for hard to buy for teens."
Although stored value cards also are useful financial tools for the credit challenged or budget-conscious individual, studies show that higher income Americans also see their potential as a money management tool. The Coinstar National Currency Poll cited that 43 percent of respondents in the top income bracket ($75K and over) were among the highest users of prepaid cards compared with other household income levels.
While prepaid cash cards help facilitate "plastic spending" and serve as an opportunity to keep expenses in check, using a prepaid cash card can also save the average consumer an estimated $343 per year in interest and fees over credit cards. The product's $9.95 purchase fee, $4.95 reload fee and $4.95 monthly maintenance fee runs less than a fifth of the cost of other similar cash card products.
"We are seeing a significant growth in the use of prepaid debit cards, especially in the form of prepaid cash and payroll cards," said Tom Miezejeski, vice president of research, The PELORUS GROUP. "The average reload of a prepaid debit card is $350, which mirrors the average amount of spending per month on a credit card and the mainstreaming of these products in high traffic areas such as the supermarket, which serve all demographic groups, will further promote the growth of the prepaid industry."
Miezejeski estimates there are 22.5 million prepaid cards in circulation, which includes cash and payroll cards. That number is expected to grow to nearly 540 million by 2008. By year-end, industry analysts predict the prepaid market will hit $71.5 billion. According to the Nilson Report, the increased use of prepaid products and the already high usage of credit and debit cards has led to a decrease in the amount of cash or checks used for consumer purchases from 80 percent when measured in dollar volume in 1994 to 66 percent today. Industry analysts estimate the dollar volume of purchases made with credit or debit cards has jumped from 20 percent to 29 percent during the last 10 years, with debit cards accounting for much of the increase.
The Truth® Prepaid MasterCard® Card can be used for purchases at nearly 32 million locations worldwide that accept MasterCard® Cards, online shopping, and for cash withdrawals at ATM locations. Currently, the cards and other prepaid products can be purchased and reloaded at 67 Schnucks stores in the St. Louis area.
About Coinstar Inc.
Coinstar Inc. owns and operates a network of 11,000 automated self-service coin-counting machines that provide consumers with a convenient means to convert loose coins into cash. Acquisitions during the past year have laid the foundation for the distribution of a wide variety of prepaid products through point-of-sale and self-service kiosks in over 13,000 drugstores, universities, shopping malls and convenience stores, bringing the total to over 24,000 distribution points throughout the United States, Canada and the United Kingdom. Consumers in St. Louis call 1-800-928-CASH or visit www.coinstar.com to find the nearest Coinstar machine with the Truth® Prepaid MasterCard® Card or prepaid wireless TOP-UP™ service.
Founded in St. Louis in 1939, Schnuck Markets, Inc. currently operates 101 stores (including five Logli stores) and 94 pharmacies in Missouri, Illinois, Indiana, Wisconsin, Tennessee and Mississippi. The family-owned company is ranked 80th in the Forbes magazine listing of the nation's "Largest Private Companies."
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This press release contains forward-looking statements relating to Coinstar, Inc.'s future operating plans and the growth of the pre-paid services market that involve a number of risks and uncertainties. These are forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. The words "believe, " "expect," "projected" and variations of such word, and similar expressions identify forward-looking statements, but their absence does not mean that the statement is not forward-looking. Actual results could vary significantly from the results expressed or implied in such statements. Factors that could cause or contribute to such differences include the popularity and acceptance of pre-paid services by customers and retailers, successful implementation of new technologies, competition from pre-paid and non-pre-paid providers, the ease of available credit in lieu of use of prepaid services, creation and acceptance of new kiosk services and other factors. You should also review the risks described under the caption "Risk Factors" included in the most recent reports filed with the Securities and Exchange Commission by Coinstar, Inc. These forward-looking statements reflect Coinstar Inc.'s expectations as of July 28, 2004. Coinstar, Inc. undertakes no duty or obligation to update the information provided herein. Coinstar is a registered trademark of Coinstar, Inc. Coinstar Center is a trademark of Coinstar, Inc. All other trademarks and registered trademarks are the property of their respective owners.