How many of you have used your phone or “tapped” your card to make a payment in the last two years? Prior to 2020, that number would have been rather small. However, the pandemic has forced many of us to make changes in how we operate, including when we shop. Many of us started buying groceries online and choosing either delivery or pickup. In business, others may have started using saved card information on their phones to make smooth payments. Initially for hygienic reasons, consumers today prefer contactless payment options simply for convenience. And that’s the key – convenience.
The vending industry is arguably the leader when it comes to convenience. Whether at work, at the gym, or while traveling, consumers have no shortage of food and drink choices through vending machines and micro-markets. But is the industry keeping up with the way consumers pay?
In its 2021 Back to Business study, Visa found that more than half (56%) of consumers use contactless payments whenever possible. Respondents also found new expectations when it came to paying in stores. In fact, tapping a credit or debit card is the contactless option most anticipated by consumers (62%), followed by mobile payment apps (41%) and paying with a mobile wallet (37%). According to the study, “The use of contactless payments has become part of the public health response to COVID-19, but the convenience, security and reliability of these payments will undoubtedly reinforce long-term habits.”
Data from the vending industry also confirm these statistics.
Earlier this year, Cantaloupe Inc. partnered with Michigan State University’s Broad College of Business for a joint study of payment trends in unattended retail. The study analyzed a sample of 160,000 Cantaloupe ePort cashless devices across different segments from January 2021 to October 2021 and found that the overall share of cashless transactions increased from 51% in January 2020 to 62% in October 2021, compared to cash transactions that have fallen to between 49% and 38% over the same period. The study also found that as of January 2020, 18% of cashless transactions were contactless.
By October 2021, contactless transactions had grown to 43% of all cashless transactions overall. In an August company statement, Sean Feeney, CEO of Cantaloupe, noted: “If we analyze our entire network of devices in the first half of 2022, we find that contactless payment methods accounted for almost half of all cashless transactions. And these trends are not slowing down. Data suggests that by the end of 2022, more than two-thirds of all transactions will be cashless, driven by consumers who prefer to type. For vending operators, this underscores the importance of offering contactless payment options if they want to increase sales and remain competitive.”
The rise of cashless payments, the company says, is being driven by consumer acceptance of contactless payments (any payment method that uses either NFC or RFID technology to “pay with a tap”), including a smart card or mobile wallet. Based on the data, the study predicts that contactless payments will grow by another 31% in 2022.
Contactless payment solutions
Manufacturers in the industry are leading the way by offering advanced touchless payment technologies that keep up with this shift in buying behavior.
Cantaloupe announced earlier this year that it would integrate Vendekin’s Retrobox, a patented hardware-enabled SaaS product, to make vending machines touchless and intelligent, supporting a frictionless consumer experience.
Launched five years ago, Vagabond’s vĪv touchless payment platform technology enabled its original telemetry device to accept payments. “We already had our own telemetry device and there were a lot of credit card options, and it didn’t make sense to develop a credit card reader back then when there were already so many good options,” said Juan Jorquera, Vagabond’s vice president of sales and marketing. “So we thought, ‘Why don’t we create something else? Let’s make our telemetry device more powerful and allow it to accept payments.’ The added bonus was that it reduced costs for our customers as the device was a fraction of the cost of a credit card reader.”
The telemetry device itself connects to the machine’s control board and can communicate with the processor and machine to make the reels spin. “So the consumer funds this machine with the payment through their phone, the machine checks the credit and sends the signal from the telemetry device to the machine’s control board and says, ‘Yes, you got the payment, spin the reel,'” he said Jorquera . “All of this was possible thanks to the back-end vending management software we developed with Vagabond. Without that, we would not have been able to develop contactless technology.”
Last year, Manuel Barrios of Florida-based CVM Services Inc. decided to embrace the power of touchless technology and upgraded certain accounts with Vagabond’s vĪv touchless payment platform. Barrios uses vĪv at every vending machine he manages at Bethune-Cookman University (B-CU) in Daytona Beach, making it the first university in the US to have fully touchless vending machines. Not only did he replace existing card readers and telemetry devices with vĪv Insight devices from Vagabond, he also removed bill validators and coin validators to make the machines fully contactless.
B-CU students and staff have benefited from this change by being able to remotely view products in the machines, have remote access to nutritional information, experience a touchless and secure purchase, and access product discounts via vĪv, including the First Purchase Free program.
Other manufacturers also offer completely contactless experiences. PayRange, for example, offered a contactless payment option long before the pandemic. With the company’s BluKey device, consumers never need to touch the machine to make their product selection. PayRange also offers consumers many payment options; It is compatible with all major credit cards and digital wallets and will have additional features to accept gift cards and cryptocurrencies from early 2022.
Vendors Exchange’s VE Touchless offers customers the option of a touchless vending experience using a closed loop between the user’s phone and the vending machine. Customers use their mobile device to scan the QR code on the machine, make their selection, complete the payment and enjoy their purchase without touching the machine. Operators can upgrade their UCB or non-UCB machines with these touchless vending machine kits.
To provide both a cashless and cashless experience, Nayax launched EasiFit earlier this year at the NAMA Show, a bill validator kit that enables cashless and cashless payment acceptance and works with Nayax’s VPOS Touch cashless payment solution. The solution enables acceptance of cash and non-cash transactions from a single location on an operator’s computer. In a statement during the launch, Carly Furman, CEO of Nayax LLC said, “The beauty of this solution is that operators can use our flagship device, the VPOS Touch, in conjunction with a simple proprietary adapter to accept cash and cashless acceptance enable the machine from the same knock-out hole… All the benefits of the VPOS Touch and the Nayax platform that operators love, such as full EMV certification, multi-sale without much pre-authorization, a full platform for loyalty and discount campaigns and Remote price change capabilities that now easily fit through a bill validator.”
Is touchless technology worth the investment?
Though the pandemic has helped more people use touchless payments (and many are starting to use the technology for the first time), it’s the convenience that’s holding it. Juan Jorquera agrees – touchless technology is more about convenience than hygiene at this point.
“It’s about consumers having a better experience,” he said. “Touchless offers a lot of opportunities that are left open and can push the unattended retail industry to behave like any other retail industry where we’re actually dealing with end dates.” He points to other retailers like grocery and convenience stores. “Every other retailer uses data from real sales to know what products they stock. They predict Sally will buy something because they know Sally has bought multiple items in the past two weeks,” he said. “Most operators have no idea who is buying what, and that’s more of a reactive sale than a proactive sale.”
Jorquera says that with Vagabond’s touchless technology, operators know exactly who is buying what and they can start targeting specific products to specific customers. “We can give discounts and change the price remotely,” he said. “We could send out promotions like, ‘If you pay touchless, you get a discount.'”
However, the question surrounding contactless payment technology is how long it will take for this technology to become the new normal. Jorquera believes that integration into the vending industry will take longer than other channels. “I think there’s always been a disconnect between what consumers want and what operators want to invest in,” he said. “If we definitely install touchless hardware, consumers think that’s one of the coolest things. They like the fact that they can see what’s in the machine before they even go. But we have found so far that many operators think [this technology] as a novelty and not as a necessity. If you put technology in front of a consumer, they will always embrace it. When you take it to an operator, they are more hesitant.”
Vagabond’s challenge was to meet both consumer and operator needs. To this end, the company is launching its own credit card reader with integrated vĪv technology. “Contactless will be an option for cashless hardware,” Jorquera said. He says operators don’t currently make purchasing decisions for technology hardware based on whether or not it’s touchless. Therefore, the credit card reader with integrated contactless capabilities gives operators the power to determine when – or if – contactless technology ever makes sense in a given location. ■