Coinstar

Coinstar, LLC

Company type	Private
Industry	Coin-counting machines, kiosk services
Predecessor	Outerwall, Inc.
Founded	1991
Fate	Spun off from Outerwall after acquisition by Apollo Global Management
Successor	Independent companies: Redbox, ecoATM, Coinstar
Headquarters	Bellevue, Washington , United States
Area served	United States, United Kingdom, Canada, Puerto Rico, Mexico, Eurozone
Key people	Erik E. Prusch (former CEO)
Products	Coin-counting kiosks, gift card exchange platform, prepaid credit cards, electronic payment kiosks
Owner	Apollo Global Management (after 2016 acquisition)

Coinstar, LLC (previously known as Outerwall, Inc.) is a US-based enterprise focused on coin-counting machines.

The company transforms loose coins into paper currency, donations, and gift cards via coin-counting kiosks that apply a service charge; it handles $2.7 billion worth of coins annually. Coinstar also manages Coinstar Exchange, a platform for gift cards. Its kiosks are commonly found near store entrances or checkout areas. With over 60,000 units installed, Coinstar operates across the United States, UK, Canada, Puerto Rico, Mexico, and the Eurozone. The company additionally provides prepaid credit cards and electronic payment kiosks.

On July 2, 2013, the firm rebranded itself as Outerwall and began trading on NASDAQ under the symbol OUTR.

In September 2016, Outerwall was taken private following its acquisition by Apollo Global Management, resulting in its removal from NASDAQ. After this transaction, Outerwall’s previous divisions—Redbox, Coinstar, and ecoATM (which includes Gazelle)—were spun off into separate independent companies.

History

Founded in 1991 as Coinstar, Inc., the company is headquartered in Bellevue, Washington.

Outerwall partnered with the US Mint around the year 2000 to promote the use of the Golden Dollar, encouraging consumers to favor coins over paper money.

In February 2009, Coinstar secured full ownership of DVD rental kiosk operator Redbox by purchasing McDonald's remaining shares for $175 million, thereby consolidating its market position. Before this deal, both Coinstar and McDonald's each owned 47% of Redbox.

By September 2009, Coinstar divested its entertainment segment—which included skill cranes and bulk vending machines—selling it to a group of three entrepreneurs shortly after renaming it National Entertainment Network.

Outerwall

On June 28, 2013, shareholders voted to rename the company from Coinstar to Outerwall. Soon after, on July 2, 2013, Outerwall broadened its offerings by acquiring ecoATM for $350 million (excluding debt), entering the mobile device recycling market and expanding its service portfolio.

On October 7, 2013, hedge fund JANA Partners revealed a 13.5% ownership stake in Outerwall and expressed plans to collaborate with management on strategic alternatives such as potential sales or restructuring aimed at enhancing financial results. Subsequently, on December 9, 2013, CEO J. Scott Di Valerio announced the termination of three initiatives—Redbox’s Rubi kiosk project, Crisp Market, and Star Studio—and an 8.5% reduction in workforce as part of a strategic realignment.

Coinstar

Following Outerwall's acquisition by Apollo Global Management in September 2016, CEO Erik E. Prusch announced his departure. The former Outerwall subsidiaries—Redbox, ecoATM, and Coinstar—were reorganized as independent companies.

Coinstar kiosks

Coinstar’s coin-counting kiosks are generally green (blue in the UK) and resemble vending machines. They are situated in grocery stores, pharmacies, banks, and various retail locations across the US (including Puerto Rico), Canada, the UK, and Eurozone countries.

Customers deposit loose coins into these machines which accept most denominations except for certain regional exclusions. After tallying the coins’ value, the kiosk issues a voucher redeemable for face value at the host retailer. Service fees differ by region: 12.5% in the United States, 11.9% in Canada, and 10.9% in Ireland and the UK; these fees are waived for bank account holders using kiosks located inside bank branches. Some retailers offer subsidized lower fees.

A "no fee" option enables users to convert their coins directly into gift cards from prominent retailers such as Starbucks, Amazon.com, Banana Republic, Gap, Regal Entertainment Group, Old Navy, J.C. Penney, CVS Pharmacy, and Overstock.com. Grocery chains like SuperValu and Stop & Shop participate in this program as well. Gift card vouchers issued online are single-use with any unused balance forfeited.

Users in both the US and UK have the option to donate their change to selected charitable organizations. By 2006, Outerwall had raised over $20 million for charities including the American Red Cross Disaster Relief Fund and UNICEF.

Since its launch, Coinstar has processed more than 350 billion coins with an average transaction value near $38; its largest single transaction involved $13,000 in pennies.

As of August 2021, over 7,000 Coinstar kiosks across 46 states incorporated Coinme technology allowing customers to convert cash into cryptocurrency.

Competition

Certain regional banks across the UK provide complimentary coin-counting services, often reimbursing customers with cash or gift cards as an incentive to attract new account holders. Initially, TD Bank's "Penny Arcade" machines were available free of charge to all users; however, starting in 2010, a 6% fee was imposed on those without accounts. After a 2016 lawsuit in New York concerning the machines' accuracy, TD Bank discontinued and removed these devices from every branch.

Publicity

On May 9, 2006, Outerwall initiated a patent infringement suit against competitor Coin X Change, focusing on technology related to voucher issuance and anti-counterfeiting features.

To draw media attention, Outerwall processed over 1.3 million pennies collected by Edmond Knowles from Flomaton, Alabama, after his bank declined to exchange them. The armored vehicle dispatched to retrieve the substantial 4.5-ton load became stuck in mud and had to be pulled free.

In March 2008, an employee was apprehended for embezzling $441,000 from Coinstar machines located in Washington, Oregon, and California by accessing cash compartments prior to armored truck collections.

Also during March 2008, investor Roy E. Disney’s Shamrock Activist Value Fund advocated for reforms in Outerwall's board structure, culminating in a settled proxy battle.

External links

• StartupStudio [Archived] Detailed interview with Jens Molbak covering Coinstar's inception, entrepreneurial experiences, and career milestones. Transcript accessible at AllBusiness