Credit card technology installed on vending machines
By Jeremy M. Simon | Published: November 2, 2006
Credit cards continue to take the place of loose change for consumers looking to make small purchases.
Among the latest developments, your plastic may become a golden ticket to the land of sugary delights for those consumers with a sweet tooth. MasterCard and a Coca-Cola bottler recently completed their rollout of 1,000 vending machines that take all forms of payment, including credit cards and debit cards, in the Philadelphia area. Nowadays, even consumers with no cash on hand can use their credit card or debit card to fulfill their cravings.
This vending machine rollout marks the latest development in the broader move toward credit card issuers enabling consumers to pay for small-ticket purchases that cost as little as a quarter with a credit card, debit card or prepaid debit card. Known as "micropayments," Visa puts such inexpensive transactions in this category if they cost $2 or less.
According to Visa's vice president of product innovation, the company is looking at enabling consumers to even pay for parking with a swipe of their card.
A recent survey indicated that consumers are open to paying for a can or soda or a candy bar with their credit card or debit card. According to a vending industry study released in December by market research firm Mintel International Group Ltd., almost one-third of those questioned said they agreed with the statement, "I would use vending machines more if I could pay with a debit or credit card."
The credit card industry and vending machine companies are complying. By 2009, up to 25 percent of all vending machines will take cashless payments, estimates Michael Kasavana, a professor in the hospitality school at Michigan State University whose chair is endowed by the National Automatic Merchandising Association.
Visa considers vending and "unattended" transit services -- where commuters serve themselves -- to be two areas particularly ripe for opportunity. The card association views as promising self-service vending machines like airport card machines, free-standing kiosks that print digital photos for as little as 69 cents, and jukeboxes. As for transit, Visa is looking at metered parking, subways and bus lines. Vancouver, British Columbia, started offering customers the ability to pay for parking with credit cards in June 2006, while Houston is currently installing around 1,500 meters that can be fed with a credit card.
USA Technologies, which is providing the cashless technology in the Philadelphia Coke machine rollout, has discovered that consumers spend 50 percent more on average at vending machines when they can buy with their credit cards or debit cards.
Credit card companies foresee massive potential with increased card payments for small-ticket items. MasterCard research reveals that about 60 percent of U.S. consumers now carry under $20 in cash, an increase from the 49 percent who did so only three years earlier.
Still, some businesses believe that cashless vending will remain limited until card issuers and suppliers lower transaction fees, since the fees eat up a large percentage of the cost of a small-ticket item. And, as the cashless vending machines use wireless technology, potential users want to be sure the devices are dependable and not inclined toward dropped signals.
Cashless vending machines should take off as long as consumers can become conditioned to using them.
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