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Maeve McKenna DuskaSenior Vice President, MarketingUSA Technologies
Vending machines and other “unattended retail” services have been accepting card-based and contactless payments for more than a decade. Maeve McKenna Duska, senior vice president of marketing for USA Technologies, a provider for the self-serve retail market, spoke with eMarketer’s Bryan Yeager about what the emergence of mobile wallets means for unattended retail and how contactless-equipped machines can serve as the “gateway tap” for first-time users.
eMarketer: How have credit card and contactless payment acceptance evolved over the years at vending machines and other unattended retail locations?
Maeve McKenna Duska: USA Technologies has been around for over 15 years. Our first foray into the vending industry, specifically, which is where the majority of our customers are, was in 2000. We had a very big, kludgy, expensive dial-up module that you would actually have to mount on the outside of the machine in order to accept credit cards.
It was expensive. There was no wireless. Landline was expensive, the communications costs were expensive. The piece of hardware was several thousand dollars, wasn’t scalable and was difficult to manage.
Now we have a device that’s below $200 and completely wireless since costs have come down. We’re talking a lot about the excitement around Apple Pay, Android Pay and other mobile wallets.
Back in 2006, MasterCard was really the first to start a push for NFC [near field communication] contactless transactions with PayPass. We started implementing NFC-specific devices. So over the last 10 years, we have put out hundreds of thousands of NFC devices into what we call the small-ticket unattended market: primarily vending, because that’s where we got our start, but it’s also a self-service carwash, commercial laundry, parking kiosks and other types of kiosks.
eMarketer: How many unattended retail locations can currently accept debit/credit cards and contactless payments?
McKenna Duska: It’s a huge marketplace. ... In the vending industry specifically there’s only about 500,000 connected cashless machines. We have 331,000 of them. But there are about 6 million vending machines in the US alone, and about the same number of washers and dryers in laundromats. It’s a wide, green field of opportunity and we continue to keep pushing forward.
eMarketer: What level of adoption are you seeing among consumers using mobile payments at your machines?
McKenna Duska: Contactless usage is still a much lower percentage than people using traditional credit cards and cash. But we believe that that will change going forward. We typically see 30% to 40% of machine usage is cashless; the rest is still cash.
Depending on the demographic, some of our better-performing machines actually do have a higher percentage of contactless transactions. For instance, one of our best demographics are colleges and universities because students are very tech-savvy and often the first to embrace new technology. There is sometimes over 50% credit and debit card usage on those machines. They also tend to have proportionally higher usage of NFC.
We think that this is the beginning. The more acceptance there is, the more that we can alert consumers and the more they become dependent on it, the more [of those machines there will be.]
eMarketer: Do you think using mobile wallets at unattended retail locations will translate into contactless payment usage elsewhere?
McKenna Duska: I think the biggest barrier is that first tap. When we talk to our partners, what we found is that we [often get] the “gateway tap.” You walk up to the machine and you don’t have a long line behind you. You don’t have a kid on your leg in the grocery store who is crying and asking if they can buy the candy bar. You’re not trying to get somewhere fast.
You’re in front of the machine. It’s you and the machine. You pull out your phone, you have this Apple Pay thing on your phone. You haven’t used it yet. You don’t know if it’s going to work. You go ahead and try it. It works. Great. Maybe you’ll try it again.
These are not big-ticket occasions. I’m not going into a department store and spending a few hundred dollars and trying out my Apple Pay wallet for the first time. I’m buying a snack or a soda. It’s sort of safe and it promotes that level of comfort. Once the consumer can start to depend on this technology for up and down the street purchases, then you have them.
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