RFID media emerges
RFID is an acronym for radio frequency identification, which is a combination of a computer chip and a tiny antenna that allows the chip to wirelessly communicate with a receiver.
As RFID technology continues to increase in popularity, the hospitality industry can expect an influx of innovative forms of cashless and wireless settlement.
RFID, which is expected to replace bar codes as an on-product identification tag, is quickly gaining traction as a favored form of settlement. Similar to the technology used to monitor prepaid toll roads, various hospitality firms are experimenting with linking an RFID device to a customer account for deferred settlement.
RFID creates Wi-Fi networks
In a cashless transaction scenario, the RFID transponder communicates a unique purchaser identifier code to a POS receiver. Basically, the hospitality business integrates an RFID system with its POS system to integrate credit and debit account transactions.
Radio frequency devices employ low-power radio waves to transmit signals. There are many standards for RF networks, but a popular format is IEEE 802.11b, commonly referred to as Wi-Fi. Wi-Fi networks transmit data using low-power microwaves.
Wi-Fi devices are capable of speeds of up to 11 mbps. A typical RF network contains one or more wireless access points and one or more devices that have an RF network adapter.
The wireless access point can be connected through a physical medium to an external network for eventual settlement. In an RFID scheme, the account holder creates a link between the transponder and a credit or debit card account to establish a payment plan.
When a purchase transaction takes place, the amount of the transaction is applied to the account. In addition, some RFID transponders are being developed with the capability to also have a built-in microchip for stored value transaction settlement as an alternative to linking to credit and debit card accounts.
RFID can work with prepaid accounts
An RFID transponder allows a customer to pay by waving an electronic wand or embedded card near a target spot right above the bill acceptor. RFID systems can be programmed to automatically deduct money for purchases from a prepaid account or charge the sale to a linked credit card account, and can sometimes be used in nonvending foodservice.
For example, RFID transponders imbedded into key chains have been tested by Canteen Vending Services Inc. in Boise, Idaho. In addition to Canteen sites, the key chains were accepted at local McDonald's restaurants.
Overall, most operators have found that RFID settlement increases sales since payment procedures are greatly simplified.
Cellular media and m-commerce
M-commerce involves a customer activating a vending machine using a mobile phone. Part of the challenge facing m-commerce for vending in the U.S. is the fact that there are a plethora of wireless carriers, each with different hardware protocols.
When m-commerce is invoked, the vending operator will experience a deferred payment scheme as monies will be collected by the phone company and subsequently transferred to the vending operator.
Noncash collections might well necessitate changes in route accountability and revenue tracking. The first rollout of m-commerce in vending is under way in Sydney, Australia by Coca-Cola Amatil.
'Open' versus 'closed' systems
The term "open system" in relation to a cashless payment plan refers to a scheme in which a purchase transaction can be recorded, processed and reconciled without proprietary settlement technology.
An example of an open system transaction is a credit card purchase. When a credit card is used as payment, the card is swiped, authorized and processed without the use of in-house application software.
The term "closed system" describes a situation in which unique application software is required to process a non-cash transaction; a closed system is usually defined by its environment (e.g., prison, institution, factory, etc.).