Friction-free transactions

Cashless & touchless vending trends
Naomi Szeben
June 03, 2019
By
Friction-free transactions
Image courtesy of Moneris Solutions
Some of the largest point-of-sale providers in Canada sat down with Canadian Vending and Office Coffee Sales to discuss how cashless vending is evolving. With more consumers using cell phones and making online transactions, we started analyzing the technological trends and asked what the future holds.

The future of unattended sales and office coffee services will change as the technology is changing: Is it worth upgrading to a higher-speed machine that will have video display capabilities, or changing out a card reading device to recognize EMV chip readers?

Darren Leroux of Moneris Solutions states, “contactless payments are at the forefront of going cashless. You’ll want to remove as many friction points as possible. We want you not to even have to think about payments. Payments are just that simple. Contactless goes a long way there, so one thing that we’ve done, we’ve been pushing that we had the latest contactless specs for all the card plans.”

“Friction” is more than just an obstacle to paying, it can also refer to the many steps that could either complicate a purchase or take longer than average to complete. Jordan Williams of Moneris Solutions illustrates: “When we have tourists coming in to the country, they don’t need to get Canadian currency before they come. They can use whatever they want and they don’t have to go through the hassle of a long payment when they’re just trying to buy a cup of coffee, or something like that, they can simply tap their card as they would in their home country and it will work here.”

Yoke VP Benjamin Thomas spoke of the advantages to going cashless. “A lot of vendors are understanding the importance of adding a card reader to their machines. Right off the bat, there’s a 60 per cent increase in the average ticket size. Now, people are not just able to buy with the one or two dollar coins in their back pocket, they are able to buy a variety of items, at once, at will,” explained Thomas. “There’s been a variety of studies that have come out showing the average size ticket of someone paying with cash, as opposed to the average size ticket of someone paying with a card is literally three or four times larger.”

Yoke claims to be one of the first to come to the market with a phone app that didn’t require someone to load funds to their account, and then have to go to the kiosk and scan their phone and deduct the funds in that manner. “We’ve actually allowed it where you load a card to your account as you would an Uber, it’s now on file and you’re able to scan bar codes directly from your phone and you’re able to buy it from your phone.

“There’s no waiting in line, and the operator is able to engage those consumers and have a direct line of communication for each of their customers, know their buying habits, know how to send messaging directly to the consumer, and now the consumer is able to get what they need, when they want and head right back to their desk, or any activity and not have to wait in line.”

According to Thomas, digital and cashless processing companies are seeing the largest downloads now ever, over the last six months to a year. “It’s definitely the future of this industry. It’s taking the mobile wallet one step further. You would just go up to a kiosk or a grocery store, you’re still at your phone, scanning the phone, as a way to interact with the terminal to charge you for your products. What we’ve done is taken a mobile wallet one step further and making your phone a check out device.”

With such technological improvements such as video displays for coupons, promotions or loyalty programs, there is a going to be a price: Bandwidth. David Riddiford, CEO of Apriva shares some insight: “The carriers in Canada — Rogers in Canada, AT&T Verizon in the U.S. —  have begun a process where they’re going to transition from 3G bandwidth and turn that down to 5G, what that means is that for the last 5 to 7 years, unattended vending machines have been selling hardware that have been connected using 3G and sometimes 2G cellular bandwidth.

“Effectively, those devices will not work. Sometime in 2021 is the estimate...users are going to have to transition to the new 4G. So that’s the best news: Nobody wants to visit a machine unnecessarily. Nobody wants to buy new hardware.

“The good news is that the carriers all view 4G a little bit differently than they do 3G. They do expect in use for quite some time, 10 maybe 12 or 15 years. they see 4G as a complement to 5G, as opposed to 3G which was just an interim step and ultimately destined to be decommissioned. It’s important for operators out there to realize while 3g may work today, any new hardware they’re installing ...they’ll likely have to replace it within less than 24 months.”

Some concerns a vendor might have would be increased fees, or larger operating costs, that would eat in to any potential profitability. However, Thomas puts those misconceptions to rest, as he adds that the benefits outweigh any concerns. “We have a lot of operators who come to us a with a bit of hesitation of going strictly cashless, and we immediately let them know, ‘right off the bat, you’re going to save time, now you are not have to deal with bill acceptors going down, having to send an employee out to collect money from the machine before it overloads, as well as you’re removing the thought of theft. You no longer have operators driving around town with your money, and the chance of them stealing or them getting robbed is removed, completely.’”

Customization is another advantage that some cashless programs offer. Office coffee service providers create a loyalty program that mimics the “points” accumulation programs with competing large chains. Moneris’ Williams shares a likely scenario: “I’ve seen gyms where they dispense pre-workouts before your workout, and a protein shake after your workout. Definitely, you’d want a loyalty program there. These are some of the things that we will see in the next couple of years that will become more and more popular. It won’t require you to have a separate loyalty card, it will know who you are based on your card data.”

Security is improving with the technology as more methods of authentication are rising, as well as limits on the cards rise as well.

“You used to have to swipe and sign, then it was just sticking your chip in and putting in your PIN. Then, it was just ‘tap’. We’re seeing those tap limits increase: They were much lower before,” says Williams. “And now, they can be increased further and further which means you can now tap when your buying a $150 - $200 dollar item which makes the market for these cashless frictionless payments increase. And of course, there are the traditional wallets that we know, like Apple Pay and GooglePay. They also allow you to tap for even more. You can essentially buy whatever you want because they are allowing you to authenticate your card through different methods. You would have a pin on your phone, so those are allowing us to say, ‘yes, we know 100 per cent that this is the right person using that card because we have their fingerprint,’ and with that, will allow them to buy a TV with contactless transactions through their phone.”

“We’re also seeing the emergence of social media payments. We have things like WeChat pay and Alipay coming out of Asia, and we’re starting to see Facebook and such getting to payments. So, these kinds of things are starting to - we’re looking at more ways that we can accept more payments from more people from all across the globe and whether that’s just scanning a code or just tapping phone, it’s just getting easier and easier that the thought of going to a bank, withdrawing money using cash, storing change - I think in five to ten years from now, they’ll be unimaginable for the average person.”

The biggest trend that was observed by all providers fell into the categories of promotions and coupons. Previously, large chains or bigger vendors could have rebates established, but cashless POS providers are working on making smaller vendors and operators compete with coupons. Thomas states: “For us, it’s taking what we have currently and adding to it, it’s about tweaking [the software.] How is the display for the end user? That is a big piece for us. “

“Twenty years ago, we were swiping our cards, then 10-15 years ago is when we started inserting chips, in the last ten years, we’ve started tapping our cards, and now I have a problem going to a gas station where I can’t tap my card anymore,” states Williams. “Just removing all these friction points is where the world is going.”.

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