How Technology Will Change Vending, Part 1

Attendees packed the room to see Dr. Michael Kasavana's V-Engineering: The next generation panel and educational session at the 2013 NAMA OneShow. The topic for the panelists was how technology was benefitting the vending and micro market industry now -- and how it could do so in the future. 

Doug Haddon of MEI started things off by asking attendees, "As the technology is coming, are you in a position to deliver an experience and accept what's in the customer's wallet?" He felt there were four main areas of technology innovating the vending industry: communications, payments, data and engagement. The last, engagement, also includes loyalty programs.

Haddon went on to say that first and foremost, operators must manage the operation process of change when adding technology. He believes operators should share a commitment with their service providers, set goals, track successes and have an individualized approach, but in the end it is management that always has to sell the vision. Don't just add technology to someone's job, warns Haddon, but make sure to dedicate the resources the change needs. During implementation, complete it in phases and don't get distracted -- make sure a process works before automating it. Also, make sure to continue training employees, which many companies say is important, but a recent poll showed 90 percent failed to do over the last two years.

Doug Haddon, MEI, asks NAMA attendees if they have the technology to deliver a customer 'experience' and accept whatever payment is in a customer's wallet.

Potential challenges on the horizon

Ron Spinella from Apriva shared some potential obstacles to technology in the future. "The old wireless cellular technology is gone. 2G is now fading to make room for 4G," said Spinella. Since many telemetry units use cellular technology, Spinella says operators must be aware if their hardware is ready for 3G and 4G.

Cashless is another area where the technology is evolving fast. The credit card industry is moving into Europay, MasterCard and Visa or EMV type cards. EMV cards have an integrated circuit chip in the card, instead of a magnetic swipe strip, which makes them harder to counterfeit. The major card brands in the U.S. are implementing this technology starting this year with full roll-out by 2018. Spinella urged operators to investigate their hardware and make sure it’s EMV compliant. "Since we're slowly working towards EMV, you have to think if your vending payment hardware is ready for EMV or older mag swipe," he said.

Ron Spinella, Apriva, warns operators that the 2G networks are going away and Europay, MasterCard and Visa or EMV credit cards are coming - hardware needs to be checked for compatibility.

Benefits of vending machines online

Reminding operators about the benefits of connecting vending machines to the internet, Mandeep Arora of Cantaloupe, covered topics such as the ability to proactively fix machine malfunctions, avoid visiting full machines, keeping inventory off trucks and adjusting products to stretch for longer time between service calls. "Twenty percent of revenues go to servicing," said Arora. "…so it can have a significant impact on the bottom line." Arora reminded operators not to rely on customers to be their quality control. From data that Cantaloupe has collected, Arora shared that bill validator jams last an average of one week. The revenue an operator experiences when a bill jam occurs is often enough to pay for telemetry for a year and telemetry is often associated with an increase in revenue by 2 percent. "So it makes sense to connect your machines," Arora added.

One operator in the audience mentioned his problem with a government location who viewed his vending machine going online as a potential security problem. Spinella from Apriva reassured him that vending is its own system - there would be no cross over with the secure government systems. Arora from Cantaloupe added that operators dealing with this concern should partner with their suppliers who have data to show what is on the machine and that there is no way to get the information out. Suppliers often have material to help educate locations.

From telemetry the topic moved into the future of software in unattended digital payment platforms with Lori Salow Marshall from Byndl. "Software as a service will come to the vending industry in the next 3 to 5 years in a big way," Marshall said. "It's going to add value." Marshall explained that most software has evolved because of need. In other environments, what she called service orientated architecture (SOA)  has already been created so users in different departments of the same business can see lots of data but in a secure way that is individualized to that person's title or log in. This will happen in the vending industry as well, with people wanting to use mobile devices. Marshall believes the vending environment is a place to evolve for SOA, where digital coupon companies, product companies and payment companies can use SOA to work together via the vending machine to reach consumers.

Vending operators will have a lot to consider in the future. It’s imperative they know what is in the consumers’ wallet and be able to accept that type of payment. They need to consider the efficiencies technology can offer their businesses and monetary savings. In part 2 of the V-Engineering coverage, we’ll cover a discussion of customer engagement and how vending is a glimmer of hope for retailers.