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7-Eleven puts Net shopping in stores

The chain is putting special kiosks in its stores that will let people shop online using cash. But for the convenience, consumers may soon have to pay up.

The newest way to shop online uses one of the oldest payment methods: cash.

Convenience store chain 7-Eleven, which is testing out interactive kiosks in nearly 100 stores, plans to allow those kiosks to accept cash for online purchases later this year. The company plans to add its so-called Vcom kiosks to up to 3,500 of its stores during the next 18 months.

"This broadens e-commerce into the unwired, the unbanked, and people not comfortable using credit cards online," said Brady Giddens, 7-Eleven's director of business development for the kiosks.

But consumers may have to pay for the convenience, as 7-Eleven is considering charging a transaction fee on orders placed through its Vcom kiosks. And they won't see the same selection they would find on a regular Internet-connected PC: 7-Eleven plans to limit the number of merchants and items offered on its kiosks.

"I like the fact that (7-Eleven is) going after a market with pent-up demand," said Jim Van Dyke, a financial services analyst with Jupiter Media Metrix. "But the question is, are (their customers) dying to get online, and if they do get online, will they buy anything?"

Credit cards have been the predominant payment form on the Web since the beginning of e-commerce because they offer an instant way for consumers and businesses to transact. But they are not a perfect payment solution. Millions of customers don't carry credit cards, and many of those who do are uncomfortable using them online because of security concerns.

But consumers have had other options. Online stores such as Amazon.com have allowed customers to pay with checks or money orders. And such nonelectronic payment methods have long been the primary way to pay for items bought on eBay's auction site. Meanwhile, numerous alternative payment companies such as Flooz and Beenz have come and gone over the years.

But 7-Eleven's move may be the biggest effort yet to challenge credit cards' pre-eminence. The company estimates that 100 million U.S. consumers don't have credit cards, and some 37 million don't even have a basic bank account. Meanwhile, about half of 7-Eleven's customers don't have credit cards, said Pat Lally, chief executive of Cyphermint, whose Pay Cash system will allow the Vcom kiosks to accept cash.

7-Eleven will have about 10 to 15 merchants offering products through the kiosks, Giddens said. And each merchant will only offer their top 10 or so products. The idea is that customers will be able to use the machines quickly so that other customers can conduct transactions, Giddens said.

"It's important for us to keep the transaction times small, very brief," he said. "We want to create an environment where they can make an easy decision. We don't want people to be able to surf around or read an excerpt of a book."

Cyphermint plans to charge merchants a commission on products sold through the Vcom kiosks and will sell advertisements on the machines, Lally said. The company and 7-Eleven are considering charging consumers a $1 transaction fee for each purchase they make through the kiosks, he said. Cyphermint and 7-Eleven plan to share the revenue generated by the sales.

Among the possible e-commerce services sold through the kiosks would be concert tickets, prescription drugs, airline tickets and maps, Lally said. Cyphermint is considering charging customers a $1 fee for printing out a map or printing out door-to-door directions from the Internet, he said.

"I think maps are going to be a big seller," he said.

7-Eleven will be adding Cyphermint's Pay Cash system to its kiosks in the fourth quarter.

7-Eleven began testing its Vcom kiosks in Texas in late 2000. The company expanded its test to Florida last summer.

The Vcom machines offer ATM services and allow customers to cash checks, buy money orders, and transfer money. Through a deal 7-Eleven has with Verizon Communications, customers will be able to view and pay their Verizon phone bills through the kiosks later this year.

Facing competition from Wal-Mart and grocery store chains that carry essentially the same products, 7-Eleven and other convenience stores have been under pressure to find new sources of revenue and new customers. Vcom is one of 7-Eleven's efforts to try to differentiate itself from competitors, analysts and company representatives said.