Vending

Card processing fees pose a challenge to vending machine operators

With card acceptance becoming a near-necessity in vending due to declining cash usage, processing fees can put meaningful pressure on already thin margins.

Photo: Adobe Stock

January 14, 2026 by Richard Slawsky

When compiling the list of predictions for 2026, one of the main issues highlighted by industry experts is the impact of payment card processing fees on operators and this impact continues to grow. According to statistics compiled by self-service technology provider Cantaloupe, 71% of vending transactions in 2024 were cashless. That was up 17% compared with the previous year. For niche markets and smart stores, that figure approaches 100%.

With card acceptance becoming a near-necessity in vending due to declining cash usage, processing fees can put meaningful pressure on already thin margins. If the vending market is to continue to expand, managing these fees effectively is a necessity.

High impact on small payments

Vending relies heavily on low-dollar purchases, with transactions typically ranging from $1 to $4. One industry source pegs the average vending spend at $1.71.

Credit card pricing models typically include a percentage fee plus a fixed per-transaction cost, typically in the range of 2.6% + $0.10.

For example, calculating the processing fees for the sale of a $1.75 candy bar, the total will be slightly below 15 cents (2.6% of $ 1.75 = $0.046) + $0.10 = $0.146). That equates to 8.3% of the revenue for that candy bar sale. In a business where margins typically hover around 20%–30%, those fees can significantly erode profitability.

Those fees can vary widely, depending on the processor.

"When it comes to credit card fees, there are a ton of various fees vending machine operators would/could get charged," said Scott Tivey, managing partner of Norwalk, Conn.-based payments processing technology company Payometry, in an email interview. "Many of them are purely negotiable, while others, like Interchange and Card Scheme Fees, are normally passed through to the merchant with zero markup from their processors."

Add to that the potential cost of delayed access to funds, as well as possible minimum monthly fees or batch fees, hardware costs and cellular data costs, the sale of that $1.75 candy bar quickly drops to the level of a public courtesy instead of a sustainable business model.

"In my practice, business owners are losing huge margins in swipe fees that tend to take more than 10 per cent of a small vending transaction," said Chad Silver, a tax attorney and CEO of the Farmington Hills, Mich.-based Silver Tax Group, in an email interview.

"The operators are already dealing with a changing regulatory environment in which the Credit Card Competition Act of 2025 is looking to eliminate the Visa and Mastercard duopoly by making big banks provide at least two routing networks," Silver said. "This has the potential of pushing prices down, but the legislative advancement is slow."

Operators also face costs related to Payment Card Industry Data Security Standards compliance, which can include updating firmware, managing encryption keys and device security, and replacing outdated readers should regulatory requirements change. Failure to comply can result in increased processing charges.

Efforts to enact change ongoing

Along with urging Congress to act on the Credit Card Competition Act, coalitions of small business groups and trade associations continue to seek legislative action to address high card processing fees. According to a letter sent to the U.S. Senate Committee on the Judiciary by the small business advocacy group Small Business Rising, credit card interchange fees are a top issue facing its small business members due to the impact those fees have on profit margins.

"Swipe fees are small businesses' highest expense after payroll, even though Visa and Mastercard add only nominal value to the goods and services these merchants provide," the group stated in its letter. "What's more, swipe fees increase the cost of food and goods for the average American family by more than $1,000 a year."

Action to address fees is also occurring outside the U.S.

"Regulatory caps and new technology are beginning to appear as solutions to the problem of credit card processing fees for vending machines," Olivia Grant, who leads the research and insights team at ExpertSure's Business Services Research, said in an email interview.

"For example, UK regulators have capped debit interchange fees at 0.2 percent and credit interchange fees at 0.3 percent for all domestic transactions with the goal of reducing operating costs for vending machine operators that sell low-value products," Grant said. "The Commerce Commission (in New Zealand) has also saved businesses nearly $90 million annually with cuts in credit card processing fees."

A separate bill in New Zealand is slated to go into effect by the middle of 2026, banning surcharging on all Visa, MasterCard, and EFTPOS payments, Grant said.

The payment card industry isn't taking those efforts lying down. According to reporting by advocacy group Accountable.US and others, banks, trade groups and payment networks, including Visa and Mastercard, have spent a combined total of about $80 million lobbying against the CCCA as of late 2024. That figure has likely increased since then. Banks and financial industry trade groups argue that the legislation would harm consumers, small businesses and financial institutions, reduce choice, increase costs and fraud risk and create economic challenges for smaller banks and credit unions.

Strategic responses operators can take

Even if processing fees remain unchanged, operators can still employ several strategies to help offset processing costs. Those include:

Raise prices for cashless transactions

Some operators are adapting their pricing structure to account for processing fees, such as:

• Setting higher "cashless" pricing, such as $2.00 cash/$2.25 cashless.
• Adding digital convenience fees, although that is prohibited in some states.

Optimize product mix

Higher-margin items, such as energy drinks and protein snacks, can help offset payment costs more easily than lower-margin items, such as candy bars and chips.

Be selective in deploying cashless machines

Operators may choose to install credit readers only on:

• High-traffic machines.
• Locations with younger, tech-savvy customers.
• Machines selling higher-ticket ($4-$8 or more) items.

Increase the overall vend price

Regrettably, some operators may be forced to simply raise prices across the board to absorb costs.

Operators can also shop around or negotiate with their existing processor for better rates. Some processors have begun offering specialized rates for vending operators. Additionally, Visa and Mastercard have programs that reduce interchange for low-dollar transactions, but only if the operator's pricing and coding meet specific criteria.

While legislative and regulatory efforts may eventually reshape the fee landscape, change is unlikely to arrive quickly enough to provide immediate relief. Until it does, operators must balance customer expectations for convenience with the economic realities of fees, equipment costs and compliance requirements.

About Richard Slawsky

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