Please ensure Javascript is enabled for purposes of website accessibility
Small-Cap Confidential
Undiscovered stocks that can make you rich

The Big Idea

Why do most vending machines still require coins and bills?

Stores and small businesses across North America have almost universally moved to electronic payments in response to shifting consumer preferences.

By going electronic, businesses remove a huge stumbling block from the sales process. And they increase the dollar amount of each transaction.

The next wave of mobile payment methods will only make cash seem more ancient. With advances in Near Field Communication (NFC), biometrics and digital wallet security, services such as Android Pay and Apple Pay could overtake credit and debit cards as the leading choice for consumers. Adoption rates are already up from 9% in 2013, to 15% in 2015.

Yet most food, beverage, laundry and other vending machines are stuck in the dark ages, forcing consumers to dig through pockets and cars to find random coins. If you’re anything like me—and millions of other Americans—you’re apt to give up the hunt. Most times you don’t have the right change anyway. The problem has been finding reliable network connections. Ethernet jacks aren’t necessarily available in the best vending locations. Machines are often moved, exacerbating the problem. Wireless networks might be available, but operators don’t always own the real estate that their machines sit on, so gaining access isn’t a sure bet. Other unattended point-of-sale (POS) machines, such as parking meters, are often in remote locations. Laundromat and arcade owners could retrofit their assets, but how much do they care if the competition is still bargaining with grain and livestock too?

Not much. That is, until recently.

The industry is finally coming into the modern age. Operators no longer have to sacrifice location and flexibility to accept electronic payments. Equipped with the right devices, modern vending machines can use cellular, wireless or Ethernet connections to accept electronic payments just about anywhere in the world. The technologies making this possible are wireless telemetry and machine-to-machine (M2M) communication, both of which are now very affordable and highly reliable. Moreover, these technologies mean sales, inventory and maintenance reports can be accessed remotely. That data is as good as gold, and can help operators maximize revenue from every machine they own.

The data from newly networked machines has been a real eye opener. Operators can now see that they are missing out on millions of dollars of potential sales because people don’t carry cash, let alone coins, like they used to. The message for those operating vending machines, kiosks and other unattended POS terminals has become clear: upgrade your equipment or watch consumers walk on by (cue Dionne Warwick!). Machines that only accept cash are now two technologies behind the curve.