The Evolution of Vending Machine Payment Systems

Ever since the invention of vending machines whereby snacks and beverages can be dispensed through machines by putting in various values of coins, people’s lives have been made easier and stomachs have been satiated as a result of the convenience of vending machines. People are used to employing coins as the sole vending machine payment method, but with the onset of new technologies such as cashless payments and NFC technology, vending machine payment is no longer limited to coins. In this article, MONEXgroup will take an in-depth look at vending machine payment and the evolving trends in Canada right now.

The earliest form of a vending machine was reportedly developed by Hero of Alexandria, around 215 B.C. where a value would dispense holy water when coins were inserted. In 1615, tobacco was also dispensed from coin-operated machines in England. In 1822, Richard Carlile from the UK developed the first newspaper dispensing vending machine. Simeon Denham developed the fully automatic vending machine that dispensed stamps in the UK and Pevical Everitt from the States developed the first modern coin-operated vending machines for dispensing postcards, which and it became widespread and grew to dispense envelopes and notepaper. In 1888, a gum company built the first vending machine in US where they would sell gum at train platforms. Then, in 1890, the first beverage vending machine was developed in France; it dispensed beer, wine and liquor.

Traditionally, people have paid with coins to receive their desired food or beverages at the vending machines, but over the years, with the development of unattended card payment technologies, people can now utilize their credit cards or debit cards to pay at the vending machines.

Magnetic Swipe followed by Chip & Pin technologies became prevalent on more recent vending machines. However, these systems aren’t ideal for vending machine operators due to high maintenance associated with non-weatherproof components causing failure, parts that are susceptible to vandalism, plus the burden of key injection and MAC’ing to ensure processing security. Vending machines in Canada today can incorporate contactless methods of payment by utilizing NFC technology and supporting card brands such as Visa payWave, MasterCard Tap & Go, Interac Flash and now Apple Pay via iPhone.

The system works by letting the customers touch their NFC enabled phones against the vending machines, to which the machine will respond by pulling up the customers’ details on a touch screen display. This allows users to pay by using a pre-selected amount and receive a more personalized experience.

The benefits of implementing the use NFC in vending machines will give companies the opportunity to manage dashboards, giving them the reporting to understand what products are selling and what products aren’t. This real-time monitoring gives merchant the ability to measure sales performance and respond to inventory status. Furthermore, the Smart Vending machines will also feature a predictive maintenance mode, meaning that the machines can forecast downtime and automatically generate service tickets.

In the US, Coca-Cola piloted vending machines that let consumers buy drinks and collect My Coke Rewards loyalty points by simply by tapping their phone. Through the joint venture created by AT&T Mobility, T-Mobile USA and Verizon Wireless, Smartphone users can download the corresponding Mobile Wallet app and add debit, credit and loyalty cards to pay at vending machines.

In 2013, Coca-Cola tested 200 machines in Austin, Texas that accepted mobile payments.

The benefit of the wallet app is that with My Coke Rewards, it comes with 30 preloaded points, and consumers can enjoy their first beverage and every 10^th drink after that for free while accumulating points that can be eventually redeemed online for merchandise and offers.

“We’re going beyond payment into loyalty,” explained Doug Busk, Director of Mobile Technologies and Strategies for Coca-Cola, who showcased the mobile-enabled vending machines during an AT&T developer conference at the Consumer Electronics Show in 2013. “This technology removes the friction of having to open a bottle of Coke, look under the cap to find a code, sign up for My Coke Rewards and log points online. And any time you remove friction, you see increases in frequency.” (Pay with your Phone: Coca-Cola).

According to the Government of Canada, Ontario is the province that has the most vending machine operators at 120 (representing 33.9% of the market), followed by Quebec at 109 (representing 20.6%). In 2014, 60.8% of vending machine operators employed less than five employees.

Vending machine payment and expenditures in Canada have suffered setbacks in the past five years; this is because people are looking to eat healthier, so vending machines operators that aren’t selling healthier options may witness a drop in revenue. Consequently, operators need to start dispensing healthier snack and drink options. Furthermore, consumers are looking for an easier and more convenient way to pay, so vending machine payment technologies have seen a surge in demand for contactless payment. Going forward, less and less people will rely on coins to pay at vending machines.

Since the recent arrival of Contactless Credit Cards technology and widespread adoption in the Canadian market, MONEXgroup has been at the forefront of this trend and we have been consistently innovating our POS terminals plus unattended vending machine payment technologies to support contactless trends and remain a market leader. We are proud to have launched and successfully deployed North America’s first Contactless Only unattended payment kiosk system.

MONEXgroup offers a wide range of customizable payment solutions for the Vending industry that maximize unattended transactions and dramatically lower maintenance costs. MONEXgroup is the one and only payment processing company in Canada that integrates unattended Contactless Only payment technology into any Self-Serve Kiosk or vending machine with PCI certification for Visa payWave, MasterCard Tap & Go, Interac Flash and Mobile Payments such as Apple Pay and Android Pay (coming soon). With our groundbreaking technology in the vending machine payment industry, we can ensure your business success and you’ll see the revenue of your vending machines go up as more consumers will find it easy to pay for their snacks and go!

When partnering with the number one payment processor in Canada; MONEXgroup will increase your efficiency and quality of service and lower the related costs. Request a Cost Comparison Analysis today.