Coinstar is the company that owns those coin-counting kiosks you typically see at the entrance of many grocery stores in the US.
Ostensibly, they provide you the service of counting and redeeming a jarful of coins into paper money and so save you “the time and effort of sorting, rolling and taking them to the bank.” Cost is 8.9 cents (US) per dollar counted; the fee is waived if you take your cash as a giftcard/e-certificate to certain affiliated retailers like Amazon, ITunes, Borders, etc.
At every bank where I’ve every had an account, the bank provides coin-counting for free, without requiring you roll them in advance (in fact, most banks break the rolls open anyway to make sure you aren’t pulling a fast one). And although Coinstar does save me the “hassle” of transporting the coins to the bank, they replace it with the equal hassle of transporting the coins to the grocery store.
I simply cannot believe there are enough people without a bank account or interested in giftcards to make this a profitable business. Obviously they are; they’ve been around–according to their website–since 1991. What am I missing here?
People are lazy. They’re going to the market anyway and don’t want to make the extra trip to the bank. Even if you do go to the bank, you have to wait in line which is inconvenient.
Banks out here, where CoinStar is headquartered (no pun intended) don’t provide the coin sorting service anymore (at least not the banks I go to). In fact, as a store owner I often receive rolled coins that are over or under a coin or two. If we tell the bank they were under they’ll make it up.
I wouldn’t write off the gift cards as a source of revenue, either. I’d be willing to wager that CoinStar gets a portion of each sale from the various retailers.
One could ask the same question about Currency Exchanges, but they are about every 42 feet around here. Yes, there really are that many people who don’t have bank accounts. Either they’re too young (I’ve seen lots of kids emptying their piggy banks into Coinstar), too poor (can’t keep a minimum balance), too distrustful (the banks in <insert third world country here> took their money before a collapse or coup) or too ignorant (surely the bank won’t have someone who speaks Polish, right?)
And, actually, I’ve used Coinstar because it’s more convenient. My bank has ATM’s, which won’t take change, or walk-up, no drive-through. So I’d have to park, take the baby out of her carseat, dodge traffic and chase her around the lobby while someone counted my coins, dodge traffic again and then wrestle her back into the carseat, against her Prime Belief that once you’re taken out of the carseat, you should be free for at least 20 minutes, and listen to her scream all the way to our next stop. With Coinstar, she’s nicely restrained in the shopping cart and gets to watch and listen to what’s going on. 9 cents a dollar is a small price for convenience and a happy baby.
The last time I took a sack of coins to the bank (US bank–this is the least of my complaints about them, but that’s another thread) they handed me a bunch of rolling tubes and pointed to a table. Yeah, coinstar would be a hell of a lot easier than rolling 20 lbs of pennies.
My bank won’t even accept customer-rolled coins anymore. They have a coin machine right in the lobby, and it’s free (no fee) for account holders.
We have a change jar in the kitchen cabinet, plus my husband and I both throw change in our car ashtrays, and when they’re full, I go to the bank and cash it in. On a good day, I can get $50 or so.
My bank makes you leave the coins, and they will count them when they get around to it. And quite honestly, it’s time consuming for them. For them to carry, dump, count then give me an account credit receipt takes about 10 minutes for the teller to process. I might do Coinstar for an Amazon voucher as I lose nothing in that I use Amazon quite often.
I work for a large bank, and we don’t even do that for our customers. As an employee, I can get free coin-counting, but the process is noxious:
Go to a banking store with merchant services and hope they have an extra canvas coin bag.
(Whine! I have to go to the bank! And stand in line! During my lunch time!)
Dump the coins into the bag and add a blank deposit ticket.
Wait in line again to give the sack of coins to a merchant teller.
They ship the sack off to a regional cash vault (where the coin counting machines are located) and a day or two later, they’ve been counted and a deposit has been posted to my account.
Or, just take the coins to a Coinstar machine at my leisure. Pay the 8.9% fee if I want instant cash, or take a full-value gift card.
As to how Coinstar makes money? It’s all about instant gratification. If you want money now, you pay the 9%. If you don’t want a gift card for iTunes, or hate Starbucks and don’t want one of their cards, you pay the 8.9%. The time it takes for me to go to the bank at lunchtime, plus the annoyance of having to cart the coins to work on the train makes for an unappealing way to save 8.9%.
As for the gift cards, I don’t fully understand the economics of them, but there has to be some profit in them - otherwise, why would you be able to buy cards at other merchants? Safeway’s not going to sell Home Depot and Bed Bath & Beyond cards if they can’t get some profit out of them. Same goes for Coinstar.
My bank also has a machine in the lobby that’s available for anyone to use, and this bank also has branches in supermarkets where they have them in the open, with no fee for account holders and a nominal fee for non account holders. It’s a great way to engage people who aren’t otherwise already banking with you.
Free money making idea for those of you who are technically inclined, Have a free coin counting system that automatically looks at the coins, identifies rare ones, and separates them out to sell to rare coin dealers. Customers just get face value of coins.
In my amusement park days we deposited alot of coins every so often from vending machines and such. We had our own sorting and counting machines and bagged them by denomination and value with little crimped seals on the bags. I don’t remember the exact amounts but according to the manager I worked with on it he said the bank takes them free if we did it this way. Is this the case or is this some kind of special scenario for merchant accounts and such.
My mom just reported to me yesterday that she noticed the Coinstar in my grocery store is now free. I hadn’t noticed it, but will check it out. What’s THAT about?
Just an educated guess, but I’d bet the store is paying the fees to CoinStar, in the hopes that the “free” service will draw in more customers. Of course, the store will most likely pass that on to you in the form of slightly higher prices. TANSTAAFL, and all that.
Coinstar reported a gross profit of $150.58 million for 2005. About 45% of their revenue came from the coin counting kiosks.
Their SEC filings indicate that they have about 13,000 coing counting machines installed, in addition to nearly 300,000 “entertainment services machines”, which they describe as “skill-crane machines, bulk vending machines, and kiddie rides.” Roughly 27 percent of their income comes from machines installed at Wal Mart and another 11 percent from machines at Kroger.
The conclusion I draw from perusing the report is that it’s a volume business. The OP is right that they don’t make much money per transaction, but they profit from having so many transactions that the aggregate is worthwhile. it’s an interesting insight, particularly in light of the recent thread where mazinger_z wondered if his mom could have a lucrative business owning a vending machine or two…
I use Coinstar. I have an investment account with a broker, not a traditional bank account. For legal reasons, they do not accept cash. My coins collect in a giant jug. When it gets to the top, I can take it to the grocery store and get a giftcard to buy things I need at Amazon or whatever. A couple times, I’ve just got the cash, but the 8.9 cents/dollar fee seems a little high to me.
In the US I’ve never used a Coinstar machine either, but on the other hand I try to get rid of my change as soon as possible.
Here in Ontario, on the other hand, there’s no paper below $5, so I’m saturated with these damn coins. Just the few in my car are probably worth $50, and I honestly try to spend them rather than accumulate them, but I collect 'em faster than I can get rid of them. I’d consider CoinStar if it were convenient. There aren’t many banks in Ontario, at least compared to the on-every-corner scheme like we have at home in Michigan.
