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Be a trend breaker
Encourage cashless transactions, and make more money.
CASH
carries
with it
benefts
and
liabilities.
Facebook/VendingMarket @VendingMagazine http://linkd.in/VendingMarketWatch
hy are vending operators punishing
consumers for using credit? They
look at cashless and admit it's prev-
alent among end users. They might even
agree with the case studies that show
adding cashless devices improves sales
beyond what is cannibalized. These oper-
ators might have added the equipment to
some of their machines and increased the
product prices to cover transaction fees
or used the additional payment option
as a way to eliminate commissions. Still
others may have added cashless readers
based on customer requests, but charge
the consumer an extra 5 to 25 cents to
use a credit or debit
card over using cash
at the point of sale, a
practice called two-
tier pricing.
I was in a meet-
ing discussing this
very topic when one
of the executives
stopped, and asked
why the operator
was charging more
to consumers that
use a credit card,
instead of less.
Many of you know
this person, Gloria
Cosby, once the
publisher of this
magazine and as
unforgettable as she
is shrewd. And because it was Gloria, I
stopped and listened.
Blast from the past
Gloria's thought was that in vending
machines, all product prices need to be
divisible by a nickel. However, credit card
prices don't. So in a machine or micro
market, if an operator is pricing products
for good proft margins, the cost per trans-
action, if less than a nickel, is forcing at
least a 5 cent increase on any one product.
If the consumer uses a credit card, the
price could actually be less and the opera-
tor simply charges the fee amount (which
in our scenario is less than a nickel).
Encouraging cashless has many benefts
Locations with many credit card users
would appreciate the price being lowered
in their favor. It might encourage them to
use your services instead of going to a place
that either doesn't charge for credit at all
(i.e. a convenience store). Also, encour-
aging credit has been shown to increase
the amount that is spent per transaction.
That's more money in your pocket, because
the consumer is still paying the transaction
fee and also buying more.
When you come right down to it, why
are we encouraging the use of cash? Dol-
lars aren't backed by gold or silver any-
more. Cash doesn't carry transaction fees,
but it is much easier for dishonorable
people to steal, miscount or jam inside a
bill validator. Cashless devices guarantee
the operator's account is credited (no
theft or counting) and can be set to notify
the operator if there is an error at the
physical device (which can sometimes be
reset remotely).
I'm not saying this will work in every
situation, but I will say that it brings a dif-
ferent perspective to the issue of pricing.
So often we focus on encouraging cash,
but what if encouraging credit would lead
to more sales, higher revenues and less
theft? It's worth considering.
W
8 Automatic Merchandiser VendingMarketWatch.com October 2014
E D I T O R ' S N O T E B Y E M I L Y R E F E R M A T