Efficiencies associated with NFC may provide the economic proposition many vending operators felt was impossible with credit and debit card acceptance. Technology developers, recognizing that operators struggle to justify the acceptance of electronic payments, believe NFC may present a feasible platform for low-value transactions.
VENDING TECHNOLOGY PROVIDERS STEP FORWARD
The recent introduction of a contactless vending application from USA Technologies Inc. involves its e-Port reader configured with NFC technology that enables cellular phone purchasing. This application represents the potential in the next wave of contactless payment technology in the industry.
USA Technologies (USAT) reported that placement of its e-Port device has resulted in a 32 percent increase in average revenues in select markets. Along with increased revenue streams, USAT also noted improved efficiency, productivity and security for operators through online auditing and monitoring capabilities.
The firm claims e-Port improved customer satisfaction by overcoming the need to carry coins as well as its ability to accept multiple forms of cashless payments, including NFC-enabled devices.
While MasterCard, Visa, and American Express have actively pursued contactless payments via stand-alone RFID technology, Discover Financial Services (Discover Card) opted to take a different approach. Discover invested in NFC technology.
In January 2008, USA Technologies announced compatibility of its e-Port device with NFC capabilities of the Discover network. With faster transactions, shorter queues, fewer customer dropouts, reduced cash handling, and lower maintenance costs, NFC-enabled applications should have a positive cash flow.
Currently, financial institutions and card processors have not announced a specific interchange category for contactless transactions, especially NFC-based payments. Some retailers perceive NFC transactions as displacing cash, which for some is a lower cost transaction.
COUPONS AND LOYALTY PROGRAMS COULD HELP IMPLEMENTATION
Creating an interchange category that provides an incentive for supporting NFC transactions may be needed to spur adoption across the vending channel. Some industry observers claim that the real incentive for unattended point-of-sale support for NFC may lie in the technology’s ability to deliver coupons and loyalty programs through the cell phone.
One possibility is for vending operators to place posters and promotional materials beside the machine to enable real-time product discounts from downloaded coupons or the presentation of nutritional and expiration date information for an informed consumer purchase decision.
In essence, the concept is to convert the cell phone into an electronic wallet that can be used for a variety of functions (as well as settlement) at the point of sale.
Available contactless/wireless technologies include:
• Bluetooth – A short-range radio technology designed to simplifying data exchange and synchronization between Internet devices as well as between those devices and the Internet.
• Near Field Communication (NFC) – A standards-based, short-range, wireless connectivity technology that enables data exchange between multiple electronic devices. Similar to RFID, NFC involves radio frequency technology.
• Radio Frequency Identification (RFID) – Use of a transceiver for the receipt of radio signals scanned from a nearby transponder.
• Short Message Service (SMS) – Service required for exchanging text messages between mobile devices.
• Text Message – Exchange of short text messages (normally less than 200 characters) between two mobile devices (e.g., cellular phones, PDAs or pagers).