Southern Refreshments is updating its fleet of Georgia vending machines to include cashless options and mobile Near Field Communication (NFC) readers, a move that it hopes can boost spending.
The idea is that more consumers will buy from self-service machines if they are easier to use, and the clearest way to reduce friction is to enable more payment options. The pairing can also boost awareness of mobile payment options such as Apple Pay and Google Wallet.
"A lot of people don't want to carry cash," said Jeff Parks, CEO of Southern Refreshments.
Southern Refreshments has added cashless and mobile payment options to about 30% of its machines in the Atlanta market so far, with more than half of the upgrades at its more rural micro markets, which are unattended self-service convenience stores where payments are handled through a kiosk. It costs up to $300 to upgrade a machine, and Southern Refreshments has set a goal to migrate all machines that receive at least $80 per week in payments volume.
USA Technologies, Southern Refreshment's technology supplier, reports that card payments increase average vending machine sales 30% over cash, with another 15% boost from mobile.
"Many [vending machine owners] are stuck around the $1.25 market," said Maeve McKenna Duska, senior vice president of marketing USA Technologies. "[Card and mobile technology] allows consumers to go ahead and pay $3 for an energy drink versus a $2.50 bottle of water, for example."
Parks said one way cashless payments can boost spending is by enabling people to buy a mix of items rather than just a more expensive drink or snack. Southern Refreshment has upgraded more of its micro market kiosks, which support the sale of a greater range of products.
"Cashless is growing fast," Parks said, adding about 18% of current payments today are cashless, up from a very low percentage just a year ago.
USA Technologies supports Apple Pay and other NFC mobile payment options such as Google Wallet. The vendor earlier partnered with Softcard, the telco-led mobile payments initiative that shut down and sold most of its assets to Google this year.
"Back then we started building NFC into our tech we saw it as having a broader potential, so we were pleased to see Apple get into the NFC arena as well," McKenna Duska said, adding USA Technologies has had discussions with Google regarding extending the earlier Softcard marketing partnership to Google Wallet. "When the Softcard [sale] happened, we ensured that we had everything that needed to make the migration to Google Wallet seamless," McKenna Duska said.
Vending machines are a strong category for mobile payments because of the ease of use and the relatively low-risk transaction amounts, said Thad Peterson, a senior analyst at Aite Group.
"Customers don't have to fumble with bills that may or may not be accepted or coins, and while a card can be used in the vendors that accept NFC, it's easier to simply pay with an iPhone," Peterson said, adding vending machines can also help increase visibility for Apple Pay and Google Wallet, and they may also stimulate trials because there is little risk from the small transactions.
"Perceived utility is important to mobile proximity payments. The technology has to be seen as being useful and valuable, and the convenience of using the technology at a vending machine may contribute to that perception," Peterson said.