Coinstar

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Coinstar, Inc. (NASDAQ: CSTR) is a company headquartered in Bellevue, Washington that produces self-service machines which convert coins into paper currency, gift cards or charitable donations. The kiosks are found mostly at grocery stores or malls. There is a usage fee for using Coinstar when converting coins to paper, but not when exchanging for gift cards or making donations. The company was founded in 1991 and its CEO is David W. Cole.

Coinstar, Inc. acquired American Coin Merchandising, Inc. for $235 million in cash in 2004. Randy Fagundo became the president of ACMI and reports directly to Mr. Cole. Mr. Fagundo leads the amusement vending business.

1 Setup
2 Difficulties with fee-free gift cards
3 Advertising
4 External links

[edit] Setup

The fee, deducted as coins are processed through the coin counter, is 8.9 cents per dollar (USD, 2005). A newer service enables users to use their coins to buy a gift card from merchants without the usual fee ("fee-free). Available gift cards include Starbucks, Amazon.com, Borders, Pier 1, Hollywood Video, Apple Inc., Old Navy, iTunes and Linens n Things. The user also has the option of donating their change to a selected charity without any paying any processing fee.

Coins do not need to be separated by denomination prior to placing them in the machine. When the Coinstar Center finishes counting coins it issues a scrip, termed a voucher, which the user can redeem at the place of business providing the coin counting service at face value for hard currency. The same mode of operation and redemption is provided on those Coinstar machines situated in Great Britain, Canada, and Puerto Rico.

If the user chooses the fee-free option the machine issues a plastic gift card or, in the case of online merchants like Amazon.com, a voucher with a redemption code.

In addition to the coin exchange service, Coinstar owns and operates amusements such as crane games, arcade games and "kiddie rides". The company also produces machines that provide prepaid credit cards and cellular phones as well as e-payment kiosks.

[edit] Difficulties with fee-free gift cards

On rare occasions, the Coinstar machine fails to complete the gift card transaction, and instead gives the customer a cash voucher with the normal transaction fee deducted. A phone call to customer service, at 800-928-CASH, will rectify the problem and return the processing fee to the customer in the form of an emailed gift certificate. The customer is asked to recite the store number and transaction number from the voucher slip to the customer service personnel to verify the details of the problem. The customer can then cash the voucher as usual, receiving 91.1% of their money in cash and 8.9% in an emailed gift certificate. The customer can find it difficult to purchase a gift card of a specific currency value.

Customer service personnel attribute the difficulty with purchasing gift cards to the Coinstar machine sharing the retail site's phone line. The Coinstar machine disconnects itself from the phone line if another user tries to use the phone line, thus producing minimal disruption to the hosting mall or grocery store.

[edit] Advertising

As part of a publicity stunt, the company offered to cash-in over 1.3 million pennies collected over four decades by Flomaton, Alabama resident Edmond Knowles. The armored truck sent by Coinstar to Knowles's home sank into the mud in his yard after being loaded with the 4.5-ton collection, and needed to be rescued by a tow truck. [1]