Cashing out: using cashless payment systems
By Michelle Brisebois
How to choose the right POS system
By Michelle Brisebois
Think of implementing cashless payment methods in your vending machines as the equivalent to giving your customers buckets of change. If someone can use a credit card, smart phone or other payment method, then they have no reason to pass by your machine without making a purchase and no reason to limit the amount they spend.
The first trend to note, is the growing propensity for Canadians to demand cashless payment options. It’s not only about customers spending more, it’s also about being accessible to more
Canadians are using cash less frequently, as digital payment options become more secure and user-friendly.
Payments Canada issued a report indicating that the value of cash transactions between 2012 – 2018 dipped by 21 per cent in favour of digital payment methods such as contactless, online transfers and in-app purchases. This behavioural shift is supported by research conducted by Mintel that reports 49 per cent of consumers, and 56 per cent of Millennials, are currently embracing mobile payment options.
A study conducted in 2016 by USA Technologies reports that vending machines that advertised Apple Pay grew their total revenue by 22 per cent. This same study revealed when looking at sales from all cashless sources, revenue from those same vending machines increased by 89 per cent. There’s theories as to why customers spend more when not spending cash. Some psychologists believe cash is tangible, so, we’re less easily parted with it and others simply feel convenience is key. The impulsivity of vending means customers don’t need the correct amount of change. A cashless payment option gives customers access to their bank account. The advantage to cashless payment technology is very specific: Faster sales growth and profitability for your business.
Vending operators may understand the benefits of adding digital payment options to their machines and may even agree it’s the logical next step for their business. Concerns of adding too many bells and whistles that may overwhelm their comfort level is a potential road-block to embracing cashless vending. Operators worry that adding more technology may drive up inefficiencies on the back end if they’re overwhelmed with too much data or new systems
“Many of the operators we speak to do share their concern around not knowing what to expect when they implement our digital payment solutions,” says Carly Furman, CEO of LLC Nayax. “They wonder if they have the bandwidth to absorb operational complexities and they are concerned about the cost to upgrade. When vending operators implement digital payment options, they see a 30 per cent uptick in revenue,” says Furman.
The compartmentalized nature of a vending operation makes it simple to start small and then scale up at your own pace and comfort level. Other businesses aren’t as fortunate because their systems are all interconnected.
“We tell operators to just give it a try with some key accounts that might be more accepting and eager to have a wider array of payment options,” says Furman. Given Millennials’ openness to digital payment options, a machine in a mall or office space would be an ideal pilot location. As Millennials were born between 1985 and 1997, they are a large part of the workforce.
Compliance and security issues around digital payment are part of the software solutions. “Our servers are PCI certified, we meet the regulations for GDPR (General Data Protection Regulations) and have security at the highest level to take the pressure and expense off the operator,” says Furman. As with most digital payment solutions, Nayax also offers a telemetry (collecting and measuring data) package that captures operational data. Telemetry software reveals the number of transactions, the average sale, the types of payments made and data points such as foot traffic, eye gaze, head turns and gender. The dashboards can also be tailored to your operational needs and capabilities. Start with number of transactions and average sale and when you become comfortable with working with that amount of data – add more options until you have the information you need to run your operation more smoothly.
If adding digital payments to cash payment options, you’ve expanded the possibilities without removing anything. When assessing how a shift to cashless payment will impact your operation, check the back-end: There are costs associated with handling cash that doesn’t exist with digital payment. It’s a security issue if your staff carryies large amounts of cash. Do you know what your vending operation’s cost is for handling cash? If you do some math around the labour involved for these steps, you may find that the small dip in sales for the “cash-only” clients won’t offset the operational cost for handling cash. “We see early adopters of the cashless payment model focusing on locations where vandalism or theft are high,” says Furman. Remove the temptation, remove the problem.
Biometric payment is an emerging technology. Many computers currently allow customers to authorize payment to stored credit cards with a finger print. Biometrics can include a variety of biological points: face, retina, voice and palm are all ways to authorize a transaction. These forms of payment negate the need to store card data or PINS on a server so they have a security benefit because your fingerprint can’t be easily hacked. These payment types aren’t mainstream yet but given that about 84 per cent of mobile users have an iPhone, adoption will no doubt accelerate with familiarity.
Streamline your operations, know when your machines are down and get insights into your business with data. If you choose to expand the ways your customers can pay, you’ll likely not regret going digital. As Carly Furman points out “The most common thing we hear from customers after they implement our software is “Why didn’t I do this sooner?”
Before you start…
The top three questions to ask yourself before implementing a cashless vending solution (courtesy of Nayax):
- What are the best locations for us to start with?
- Who will be our point of contact to work with the provider and oversee the test pilot with our first machines?
- What are our expectations and goals for the first 60 – 90 days? How will we measure success? o