The Components Of Credit Card Vending

The phrase, “cashless vending,” can encompass a wide spectrum of payment options. One may think of mobile phone payment, loyalty card programs, closed campus systems, closed network cards, pre-paid cards, Internet based systems, or biometric identification. Of course, the most common application of cashless vending is credit card and debit card payment.

For the purpose of this discussion, the subject matter is limited to credit card and traditional debit card vending applications using cellular technology for data transfer. The goal of this article is to provide an understanding of the structure and options related to cashless vending.

Specifically we will cover:

• A definition of cashless vending.
• The flow of information from vending operator/bottler to credit card processor.
• Equipment requirements and options.
• Service requirements and options.

It is fairly easy to set up a brick and mortar retail credit card processing account. Equipment and banking programs are available at warehouse clubs or through the business owner’s local banker. Cashless vending, however, is a different animal. The vending application is unattended; a telephone line or Internet connection is generally unavailable and the amount charged is usually classified as a micro-transaction.

What does this mean to the vending operator? You guessed it; a little more effort to get started and a few more dollars.

The good news is that costs are coming down to build a cashless vending application. The reduction in cost is coming from each area: hardware, transaction fees and monthly network charges.

The flow of information for a credit card transaction begins and ends the same way as a cash transaction: the customer presents payment to the machine and the transaction eventually is reconciled in the vending management software system. What happens in between is what makes the cashless transaction so unique. We will examine each component.

POINT 1: THE MACHINE CARD READER

The machine card reader is where it begins with the consumer. A cashless payment is presented in the form of credit, debit, or prepaid card. The card is recognized through a magnetic reader (swipe/plunge) and/or a proximity reader. Proximity readers are the wave of the future, as credit card issuers have embraced this technology by installing RFID chips in many new credit cards. A newer credit card will have a wave, indicating the sensor used for “tap ‘n go.”

The benefit of proximity readers resides in the speed of the transaction at traditional retail establishments.

MasterCard, VISA and American Express have all embraced this technology with the brands, PayPass, payWave and ExpressPay, respectively.

Each vending machine reader requires a special embedded antenna for proximity cards, and this technology will add cost to a vending machine card reader. However, the rate at which the card companies are issuing proximity cards to consumers should be a reason to consider the extra, one-time hardware cost.

POINT 2: THE MACHINE TRANSMITTING DEVICE

Once the card reader has read and encrypted the card data, the next step is to transmit the information from the vending machine. Due to the nature of vending, the most practical way of getting the data out of the machine is through a cellular modem that can send the information along the way. The machine transmitting device is commonly referred to as a “telemeter.”

A Wide Area Network connection (WAN) is needed to transmit the encrypted card data from the vending site so that the transaction can be confirmed and completed. A WAN cellular connection works in the same way as most cell phones, via a “SIM” card. However, sometimes it may be desirable to network multiple vending machines together to create a Local Area Network (LAN).