Credit and debit card payments at vending machines could present a whole new realm of opportunity for independent sales organizations.

But first, ISOs should ask themselves if they’re ready to learn a complicated new niche and willing to help sometimes inexperienced vending machine owners navigate the electronic-transactions business, a vendor tells ISO&Agent Weekly.

Independent vending machine owners, often called vending operators, want to go cashless and need someone to show them how, says Stacey Finley Tappin, Apriva senior vice president of North American sales and marketing communications.

Apriva provides wireless gateway services for the machines, Tappin says. The company controls the data, manages the authorization and connects the machine to the payments processor, she notes.

“When we entered this market in 2010, it was still really greenfield,” Tappin says. “You had the vending operators going, ‘Why do I need a merchant account? What’s interchange?’ ”

Plenty of those operators remain uniformed about making their machines cashless, enough to represent an opportunity for ISOs, even with Coke and Pepsi controlling 80% of the vending machine market, she says.

“There is a play here for ISOs,” Tappin continues. “A handful could get into this market and be really successful.”

Even the ISOs and agents who succeed in the world of vending payments won’t have an easy time of it, she cautions.

“It’s not turn-key. It’s not like the terminal space,” Tappin warns. “You really have to do a lot of hand-holding. These folks are new.”

The vending-machine hardware’s more complicated and harder to set up than payments terminals, she says.

ISOs would also have to invest in knowing who the vending operators are, understanding the market segment and having a relationship with the hardware providers, Tappin contends.

“It’s more work than selling a merchant a terminal and being done with it,” she continues. “There are multiple players involved in vending. The hardware can be quite expensive.”

An independent vendor might have a thousand devices scattered across a couple of university campuses and corporate headquarters. That makes the cost of going  cashless by accepting cards in the machines a significant investment, Tappin says.

Moreover, cashless vending machines make sense only in some locations, depending up on the clientele and the foot traffic.

But the market is growing rapidly as vending operators continue to add different types of products to the list of goods available from machines.

Besides the usual beverages and snacks, entrepreneurs are adding just about anything to the vending-machine category, even designer purses, Tappin notes.

Meanwhile, travelers are buying iPhones and iPads at airport vending machines, indicating that big-ticket merchandise can sell in machines with the right location, she says.

As vending machines become more advanced, Apriva intends to tie them in with electronic wallets, quick-response codes, and or free merchandise for frequent customers.

What’s more, the category stretches beyond merchandise to any “unattended” commerce, which can include anything from  newspaper boxes and laundromats to parking meters and car-charging stations, Tappin notes.

“We call our product offering ‘Apriva Unattended Payments,’ “ she says.

Still, despite the upside, the market isn’t right for all ISOs, Tappin suggests.

“It’s a niche for certain ISOs that really want to spend the time understanding this market,” she says.

 

SOs could begin a foray into vending by attending trade shows held by organizations like the National Automated Merchandising Association.

The shows’ attendees include vending operators, large bottlers like Coke and Pepsi, hardware providers, and gateway providers, Tappin says.

It’s worth noting, she suggests, that ISO shows don’t attract merchants, but the vending shows attract the equivalent of merchants – the vending operators themselves.

“So you can walk that show or have a booth as a merchant acquirer or processor and pick up a lot of business that way,” Tappin advises

 

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