For more than 20 years, I've been attending seminars explaining the advantages of a circulating dollar coin. From the Susan B. Anthony dollar in 1979 through the Sacagawea dollar (which made its debut early in 2000) to the Presidential Dollar series, which entered production in 2007 and continues in production, the Mint has made consistent and diligent efforts to get the coin to circulate.
For one reason or another, the modern American public never has taken the dollar coin to its collective heart. The vending, amusement and bulk vending industries (along with the Coalition for the Blind, the Department of Transportation and many others) have worked hard to support it. But, as we all know, the coins have failed to enter widespread use. Some think that this is because of their size -- no one wants a pocketful of coins one-third larger in diameter and one-third thicker than a quarter -- but the consensus is that no dollar coin will circulate as long as we continue to print paper dollars. It is not a coincidence that every other industrial nation now has a circulating coin equal to or greater than a U.S. dollar in value, and none of those nations has a low-denomination banknote.
In a recent piece, the British Broadcasting Corp. mocked Americans, charging that our $1 coin is not used because, in the BBC's judgment, most Americans prefer their $1 bills. The BBC explained that the Mint thinks dollar coins are caught in a vicious circle. Retailers are afraid that consumers won't like getting them in change, while consumers are afraid retailers won't accept them as payment, so both parties shy away from using them. The BBC also claimed the U.S. Federal Reserve is "running out of storage space" for the uncirculated coins.
There may be a silver lining here. It appears that the nation's repeated failures at achieving liftoff for a dollar coin have compelled the American vending industry to accelerate the development and use of cashless payment systems for vending machines. And this may be the best thing that has happened to us since the invention of multipricing.
Way back in the runup to the Anthony coin's debut, one longtime industry observer stood up at a seminar to remark that, by the time a new dollar coin was introduced and gained traction, we would need a $2 coin. His point was well-taken then -- the whole logic of the $1 coin, and the $1 bill validator, was that people prefer to make a vending purchase with a single insertion. This would create a problem for a $1.35 item, even if we had a wildly popular $1 coin.
Far-seeing as he was, that observer could not have known that young consumers, more than three decades later, seldom would carry cash in any quantity, but would expect to pay for nearly everything with a credit or debit card. I'm not sure this is as categorically true as the futurists think it is, but it certainly is worth keeping in mind. Even old fogies may not spend a dollar in a vending machine if they know they'll need it to buy a newspaper on the way home. A machine that can't accept plastic is going to miss sales, no matter what the nation's currency looks like.
We've covered cashless vending in the pages of VENDING TIMES since before the advent of vending-specific stored-value cards when I was in junior high school. My recent Upfront (June) discussed the advantages of adopting the new payment technology, which can give vending access to a new world of retail promotional opportunities. The National Automatic Merchandising Association just launched an industry-tailored Cashless Solutions program for its member operators (see VT, June.) Poke fun at us if you wish, BBC, but it looks like our time has come.
In this issue of VT, you'll read about Pepi Food Services' five-year plan to upgrade 100% of its machines to accept cashless payment. And they're not just talking about high-end locations. Pepi's vending routes serve a largely rural, primarily blue-collar market. While credit and debit card use has traditionally not been widespread among this demographic, Pepi Food Service sees the demand for it growing.
"If it's in your pocket, it has to work in our machines," said Pepi's Vic Pemberton. In today's market, an operator can't afford to lose any sale because the customer is carrying value in the wrong format.
Operators have been of two minds about the advances of payment systems. Everyone could see that three-price coin mechs, coin changers, standalone bill changers in full-line locations and dollar bill validators would be more convenient for customers and versatile for operators, but nobody really wanted to spend the extra money to install one -- until they found out what it did for sales.
So our need to look beyond the dollar coin to what patrons really want may turn out to be an unanticipated benefit of what the BBC sees as a failure.