PayRange Enables Cashless Sales In Non-Networked Vending Machines; Amusements And Other Payment Applications Abound

Posted On: 3/20/2014

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TAGS: PayRange, vending, cashless vending, mobile payments, amusement machines, self-service appliances, Paresh Patel, Bluetooth payment system, PYMNTS Innovation Project 2014, VendNext, Blukey hardware device, MDB coin bill validator, mobile payment transaction fee, Courtesy Vending, vending operator

vending, payrange, mobile payments, cashless vending

Additional reporting by Nick Montano
and Tim Sanford

CAMBRIDGE, MA -- Imagine a mobile payments system without the wireless costs -- one that is designed to be the simplest and most accessible solution for vending, amusement and other self-service appliances of all kinds, including electromechanical equipment like bulk vending machines. Vending industry innovator Paresh Patel has not only envisioned such a solution, he's bringing it to market. PayRange allows customers' phones to handle the entire transaction process over their cellular networks, while using Bluetooth personal area networking to actuate the vend.

The PayRange founder and chief executive introduced the novel solution yesterday to a crowd of 600 senior executives from the payment industry during PYMNTS Innovation Project 2014 at Harvard University here. Until now, he explained, PayRange Inc. had been operating in "'stealth mode' under the code name VendNext.

The turnkey PayRange payment system includes a Blukey hardware device for the machine along with a mobile app and transaction processing service for the customer. Consumers maintain a prepaid balance on their smartphones and use it to make payments at a variety of machines that can include vending, amusement, parking, transit ticketing and laundry equipment.

"The Blukey device works with virtually any vending machine made in the last 15 years, plus millions of other kinds of machines," said Patel, a veteran vending operator and inventor of the VendScreen touchscreen interface for vending machines. "The route driver can install it in the field, with no need for a service tech."

vending, payrange, mobile payments, cashless vending Installing PayRange takes just 30 seconds and is as easy as plugging a USB thumb drive into a computer, according to Patel. In its simplest implementation, the Blukey device may be inserted in-line anywhere on a vending machine's MDB line, without tools or configuration. A simple implementation involves nothing more than disconnecting the machine's existing MDB coin and/or bill validator from the controller board, connecting it to the Blukey and plugging the Blukey back into the controller.

PayRange's Blukey interface can also work on amusement equipment, using the same app and hardware but different firmware. Patel explained that, for this role, PayRange provides a harness with four wires; two connect in-line with the "cherry switch" that detects the coin drop. That switch remains connected as usual; the installer simply splices in the connector. The other two wires then are connected to the game's 12-volt power supply to complete the installation.

Patel explained that the system can be adapted to any dispensing device in which a vend can be controlled electrically, for example by a solenoid.

To use PayRange, the customer simply downloads the mobile app to set up an account, which involves no more than designating a credit card for payment and choosing the amount of money they want to deposit into the account.

When users are in "pay range" -- about arm's length from the machine -- they receive an alert, and can then immediately "swipe" their finger on their smartphone's touchscreen to send payment to the machine via the phone's Bluetooth LE connection.

Operators pay a one-time $49 fee for the Blukey hardware and 3.95% per transaction. There is no additional monthly wireless network fee, since the required connectivity resides in the phone rather than in the machine. Transactions are sent through the phone directly to PayRange's credit card processor, which returns an encrypted token that the phone sends to the machine's Blukey device to enable the vend.

"There is no vulnerability," Patel asserts. "Our server has no credit card information, which can put operators and their customers at ease. It also reduces service problems because there's nothing physical receiving the payment, like a card reader or bill validator. And because the phone is in the user's hand, it simplifies ADA compliance since they don't have to reach for anything."

He emphasized that the industry has not kept pace with payment technology and needs to catch up. "Vending in many ways is like a developing nation," Patel said. "They didn't get the landline infrastructure in place before mobile phones came. In our case, it has taken so long for vending to build up the card infrastructure that it makes sense now to 'leapfrog' right into mobile payment. People may run off without their wallets, but they will turn around and go back if they forget their phones."

While mobile payment is certainly a hot "space" for developers at present, Patel said he is differentiating PayRange by focusing on unattended points of sale.

"We believe mobile payment traction will occur first in markets in which mobile displaces cash, because that is where the most pain is for users," said Patel. "More specifically, cash payment on machines is thought of by consumers as unreliable with frequent jams, untrustworthy with 'eating-money' mishaps, and inconvenient because it requires change or specific denominations of bills, or both."

He also pointed out that the PayRange system works faster and better for consumers because they don't have to wait for authorization; their accounts are prepaid and the transaction processing software need only debit them.

Patel is a veteran of the unattended-retail industry, having founded VendScreen, which manufactures an Android-based touchscreen interface for vending machines. He owns Courtesy Vending (Portland, OR), one of the largest vending operations in the Pacific Northwest.

"PayRange is enabling machines to accept mobile payments in a truly cost-effective way," said Rob Wiltbank, angel investor and associate professor of strategy and entrepreneurship at Willamette University (Salem, OR). "By eliminating the need for the machine to have its own cellular connection and by aggregating micro-payments, this solution deals with the reality of tight margins for machine operators in ways that every other option does not. There is a massive market for this right now."

Patel said PayRange has recruited a team of experts in hardware, mobile and payments technology and will launch its solution at the National Automatic Merchandising Association's OneShow in Chicago.