MSU, USAT Analyze Cashless Payment Impact On Low-Volume Sites

Posted On: 5/6/2019

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LAS VEGAS -- The conventional wisdom in vending has tended to approach upgrading to a cashless option by starting with the highest-volume machines, where the sales increase will be the most dramatic. However, a recent study has found that low-performing locations can experience substantial revenue growth as well.

The research, conducted by Michigan State University in collaboration with USA Technologies, disclosed that vending operators who added cashless technology to machines doing less than $2,000 a year in sales experienced top-line sales growth of 110%, on average, over the 18 months following the deployment. This compares to the average 35% increase enjoyed across the total installed vender base.

The study also found that, following deployment of cashless technology, machines experienced an increase in cash sales too. While cashless sales increased by 131% on low-performing machines after 18 months – compared to 78% for the total population of machines studied – cash sales increased by an average of 97% on the low-performing machines during the same period, compared to 17% for the total population of machines.

Results of the report were presented by USAT vice-president Jim Turner at the recent NAMA OneShow. In a session held at  the NAMA Learning Lab in the exhibit area, Turner explained that "We believe the results of this study underscore the real financial and operational value of adding cashless technology to every machine.

"Not only could cashless technology facilitate more sales because it enables people to pay with whatever method is most convenient for them," Turner explained, "but it could significantly increase cash sales as well." This effect, he said, is partly driven by the ability to offer premium products, and to an increased awareness of machine performance attributable to online management tools.

"We believe that having the data to make better decisions, even on a low-performing machine, can potentially result in significant additional revenue for operators," the USAT executive observed.

The study also found that on average, over the first 18 months following deployment, for machines equipped with cashless technology –

• There was a 26% growth in total transactions;

• There was a 74% rise in credit card transactions and a 13% increase in cash transactions;

• 70% of all growth was accounted for by increased transactions;

• Overall spend per transaction rose 7%.

The study was conducted by Michigan State University's Broad College of Business – MS Business Analytics program, which provides an educational experience combining a number of university resources to address the study and application of analytics as well as research in the discipline.

As part of the program, USAT provided MSU with access to its "Knowledge Base" database, which captures sales and transaction data on all machines connected to USAT's cashless payments platform. MSU  analyzed the data on select machines to evaluate sales activity for as long as 18 months following the addition of cashless capability. Results were based on the sales activity of 250,000 vending machines connected to USAT's cashless payments platform nationwide, including 95,000 low-performing machines.

"MSU's MSBA program conducts eight to 11 studies per term with industry partners as capstone projects," said Gayle D. Cohen, M.Ed., Assistant Director of Graduate Programs at Michigan State University. "We are happy to have partnered with USA Technologies on this study of consumer behavior around cashless technologies on vending machines, the largest study of its kind.

 "Projects like the one with USA Technologies provide a great opportunity that allows MSU students to get valuable first-hand experience in computational business analytics, machine learning, and big data analysis," she emphasized.

USA Technologies, Inc. is a payment technology service provider of integrated cashless and mobile transactions for the self-service retail market. The company also provides a broad line of cashless acceptance technologies, including its NFC-ready ePort G-series, ePort Mobile for customers on the go, ePort Interactive and the QuickConnect API Web service for developers.

Through its acquisition of Cantaloupe Systems, Inc., USA Technologies offers logistics, dynamic route scheduling, automated pre-kitting, responsive merchandising, inventory management, warehouse and accounting management solutions. Cantaloupe is a premier provider of cloud and mobile solutions for vending, micromarkets and office refreshment services.