July 14th, 2006 at 9:50 pm
About 3% of the 8 million vending machines in use in the US currently accept card payments, but by 2009, this proportion is expected to reach 50% as costs for card readers and interchange fees drop.
Vending machine sales in the US generate about USD 45 billion annually across product sectors such as drinks, cigarettes, candy, snacks, confectionery and toiletries, London-based firm, Mintel International Group reports. About 25 per cent of these vending machines sell items for USD 1 or more, leading insiders to believe that more cash sales can be converted to card payments, even after reader retro-fitting costs and upgrades are factored in.
Fitting a payment card reader to a vending machine now costs about USD 400 per device, and is similar to the insertion of a coin receptacle or dollar bill reader at a machine. Card-acceptance technology has fallen in price due to the availability of plug-and-play card readers and modems. For this reason, card readers and PIN pads do not require a new hole in existing vending machines, which is a huge plus for operators wanting to tap the benefits of cashless payments. Untapped vending markets for card payments include metro fare cards, travel tickets, postage stamps, arcade/video games, slot machines, change dispensers, jukeboxes and pool tables.
Just recently, Mintel advised that the vending industry in the US has to change to capitalize on new market growth opportunities and satisfy customer demands for new products, cashless payments and technology. In the hospitality industry for instance, wireless vending technologies enable hotel guests to use their keycards to make cashless purchases at on-site vending machines, with charges appearing on their final guest bill. On university campuses similarly, students can use cashless payment-enabled campus ID cards for purchases at vending machines or in laundry rooms, with the Internet as a tool to plan on-site card use or card account management.
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