The annual National Automatic Merchandising Association convention has been the principal forum for the ongoing industry conversation for six decades or more, and participants at this year's OneShow in Las Vegas have a great deal to talk about. We expect the interface between vending machines and customers, which includes both product selection and payment systems, to be a prime topic.
As VT goes to press, Canada has announced that it will stop producing one-cent coins this fall. While Canadian pennies will remain legal tender, there will be no more of them. | SEE STORY
This also has been proposed in the United States. Some readers will remember that the late James Benfield, who headed the Coin Coalition in its successful effort to update the Anthony dollar, always advocated getting rid of the penny. That would free a compartment in the cash register drawer for dollar coins, and besides, the penny was fast becoming a nuisance that no longer served a useful purpose.
While pennies had been important in vending and related endeavors well into the 1960s, they had no real role to play in the modern full-line industry, although there were a couple of interesting attempts to find one for them.
With this in mind, it is worth pondering that recent discussions in Washington about eliminating the dollar coin or the dollar bill have not provoked much response from the vending industry. Three decades ago, there was a strong argument for issuing a $1 coin that actually would circulate. It was said, rightly, that the dollar of 1985 was about equivalent in value to the quarter of 1965, but it was much more difficult to use in vending machines. Today, it probably is equivalent to 15¢ in 1965 currency, but it isn't nearly as difficult to use. And it can be paid back in change.
What's more, currency more and more is becoming one of a number of payment choices. A credit or debit card is an instrument that identifies its user and affirms that he or she will have sufficient dollars to make the desired purchase. The debit card makes any merchant terminal an automated teller machine, allowing users to spend the dollars in their bank accounts. A credit card is, in effect, a check with automatic verification features. A prepaid telephone card or gift card is a promissory note; the bearer has lent the issuer money, and the loan is redeemed at the user's convenience.
A variety of services allow subscribers to set up accounts at a secure website through which payments can be made to sellers who are not equipped to handle credit cards. PayPal is the best-known of these, but new ones designed for use with mobile phones are being developed all the time. We expect to see this kind of thing applied to vending payment at the 2012 OneShow exhibit.
When the Canadian penny stops circulating, prices will continue to be stated in cents, but a cash payment will be rounded up or down after the applicable tax has been calculated; noncash charges will still be made to the odd cent. This should not be confusing to people accustomed to one price for cash, another for card payment and, perhaps, a third with a loyalty program. With or without a circulating penny, this makes it very important to tell the customer what is going on.
That's where the user interface comes in. Small color LCD monitors for installation above a vender's selector panel have been around for a while, and the vast expansion in design and manufacturing capacity brought about by the popularity of touchscreen-equipped smartphones and tablets is spurring their integration into vending machine upgrade kits and new equipment. Either type can offer a new dimension of customer communication, and this will be increasingly valuable as payment options and promotions conducted through social networks continue to multiply. We expect to hear more about this at OneShow, too.
These convergent trends have been hailed as a potential game-changer for vending. And we may derive an unexpected benefit from the growth of subscription payment systems, spurred by the surge in smartphones begun by Apple's iPhone and the applications written for it. This confronts all retailers with the challenge that vending operators have faced: to enable customers to pay with whatever they have in their pockets. It is a more level playing-field now, and vendors (at last) have access to the same technology as other retailers do. This has given us a whole a new ball game.
Steady progress toward open systems based on defined standards also is increasing operators' flexibility in matching the payment system and/or interface to the particular needs of a location. We are moving rapidly toward a world in which conventional cash payment capability can coexist with client-specific internal cashless systems, magnetic and contactless credit and debit card acceptance as well as mobile payment programs, all within one operation. Operators (and retailers in general) need all of these systems to handle settlement in a uniform manner. The OneShow exhibit provides an opportunity to emphasize the importance of this when talking to service providers.
It will be a thought-provoking show.