Shop Talk: USA Technologies wants to take vending machines coinless - Technical.ly Philly

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May 20, 2009 1:58 pm

Shop Talk: USA Technologies wants to take vending machines coinless

Have a pocketful of pennies and a hankering for a soda? Good luck. Malvern-based USA Technologies (USAT) wants you to be able to pay with plastic or with a swipe of a cell phone at the vending machine. The company, which manufactures payment systems that let consumers purchase goods with cards instead of cash, may […]

USA Technologies ePort cashless terminals let consumers pay at vending machines with credit cards and RFID or Near Field Communication technologies. Photo courtesty of USAT.

Have a pocketful of pennies and a hankering for a soda? Good luck.

Malvern-based USA Technologies (USAT) wants you to be able to pay with plastic or with a swipe of a cell phone at the vending machine.

The company, which manufactures payment systems that let consumers purchase goods with cards instead of cash, may be the next vending machine technology superstar you’ve never heard of.

Turns out USAT is a leader in the wireless, cashless payment market.

“This little Malvern company that’s in its infancy has a 90 percent market share,” USAT Chairman and CEO George Jensen tells Technically Philly.

USAT ranked sixth in the nation for the totality of point of sale terminals by consumer payment system research publication The Nilson Report, behind companies like VeriFone and Motorola, who Jensen says aren’t in the same cashless space as USAT.

“We strongly believe we’re the only company in the world that has a complete turn-key program that takes all forms of cashless, where the machines are wirelessly networked together,” he says.

The company sells its cashless ePort terminals, pictured above, in a variety of formats. Whether retailers are looking for a traditional magnetic-stripe card reader, RFID-powered contactless payment system, or a Near Field Communication (NFC) system (which lets users deduct payments from their banking accounts by swiping a cell phone), USAT has them covered. All of the devices let retailers control prices and monitor sales wirelessly through a service provided by the company.

The company’s G8 ePort terminal is mag-stripe-, RFID- and NFC-ready for $329. Its Edge terminal, which only includes a simple card swipe, runs for $199. Both terminals, along with most of USAT’s cashless products, include wireless connectivity over GSM cellular networks.

No matter the solution, installation is a breeze, and the company’s payment technology can be up and running “in 10 minutes,” Jensen says.

USAT boasts credit-card partners like MasterCard, Visa and Discover, and mobile networks AT&T and Rogers Wireless, just a smattering of the 500 partners and nearly 50,000 terminals using the company’s technology.

Consumers are expected to use less cash and more plastic at retail locations, according to The Nilson Report.

The company runs six million transactions per quarter, and is hoping to continue tapping into the $240 billion small ticket retail market that includes parking, laundry, gaming, and other industries.

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Last year, MasterCard purchased close to 20,000 USAT systems and handed them out to customers like Coca-Cola. Jensen hopes, based on industry trends, that that is just the beginning.

“It was MasterCard that gave McDonald’s $5 million in free [cashless] hardware. After McDonalds, the entire fast food industry followed. A $100 billion industry went cashless,” he says.

“They’re hoping to tip the vending industry, which is the last and largest remaining cash business.”

Since the deployment, USAT’s revenue increased to $16.1 million in 2008 from $9.2 million in 2007; a 75 percent increase.

It has major customers, too.

Sony, Aramark, PepsiCo and Coca-Cola, Bank of America, Pfizer, Bed Bath & Beyond, and more have signed on to use the technology.

In February, USAT announced that the company’s ePort cashless payment technology is being used on self-serve Starbucks coffee brewing machines being installed in offices.

“After 5 years of R&D with Starbucks, we’re rolling out their initiative for taking the brand out of their store. It’s 100 percent credit card, 100 percent us. For them to pick us speaks volumes,” he says.

Starbucks chose the company’s flagship product, he says, a RFID-powered contactless payment system coupled with a traditional magstripe credit card reader. Jensen says that of the 60-70,000 contactless payment systems installed in the U.S., about half of them are USAT’s.

If it isn’t Moore’s law that is helping the business the cashless technology has dropped in price to $199 from $1,900 just seven years ago than it’s the acceptance of plastic as a consumer payment method.

According to a report by The Nilson Report, debit cards are expected to surpass cash as a preferred method of payment by 2012.

“There’s a whole new generation coming up and thats what they want to do. They do not think twice,” Jensen said.

Every Wednesday, Shop Talk shows you what goes into a tech product, organization or business in the Philadelphia region. See others here.

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