Loyalty & Rewards

How Unattended Retail Doubled Apple Pay’s Merchant Footprint


When Tim Cook announced at Apple’s last earnings call that Apple Pay was being accepted at 200,000 new merchant locations (Listen to the announcement here), no one focused on the fact that those merchant locations were part of the retail’s big blue ocean: unattended retail. Stephen Herbert, chairman and CEO at USA Technologies, is a leader in delivering digital payments and loyalty services to that retail category and was the power behind Cook’s announcement. Herbert caught up with MPD CEO Karen Webster to discuss his company’s national rollout of Apple Pay, how his merchant segment helped Apple Pay double its merchant footprint and what’s next for unattended retail, Apple Pay and digital payments more broadly.


KW: We’re here to talk specifically about a really exciting announcement that USA Technologies made recently about Apple Pay. The announcement related to the national rollout of Apple Pay to your 200,000 merchant locations. Tell us about this – how did it happen, what merchant locations are we talking about, and what impact does this have on the business?

SH: It is indeed an exciting time for our company, and we believe an exciting time for the payments industry in terms of Apple and Apple Pay’s potential impact.

The locations that we brought to the merchant portfolio for Apple Pay are right in the main wheelhouse of our business: that’s in self-serve or unattended retail. Those locations include things like vending machines, parking kiosks and commercial laundry – and they’re located in many, many places. There’s a certain ubiquity associated with the locations that our customers operate in – they’re at colleges, airports, corporate campuses, amusement parks, factories, military bases.

I can’t speak for Apple directly, but I believe one of the things they were very interested in is the fact that there is ubiquity associated with our customer base. Furthermore, consumers typically visit these locations – for instance, vending machines at a workplace – multiple times a day. That’s really how it came about, and those are the types of locations that we’re focused on in our work with Apple Pay.


KW: So I’d assume that these unattended retail locations are already NFC enabled?

SH: That’s correct. We began to invest in NFC and contactless about a decade ago, so we built out what we believe is the single largest footprint operated by a single entity of locations that can take NFC-based mobile payment.


KW: Is accepting Apple Pay something that you believe will drive incremental revenue for the merchants who accept Apple Pay?

SH: Yes, we actually have some very hard data on the impact of mobile payments, particularly in unattended retail. As you know, we’ve done work with Softcard for a number of years, and we have close to 100,000 locations with them that not only accept mobile payments, but also handle loyalty.

We’ve been taking Apple Pay transactions for some time, and one of the things we’ve learned that our merchant customers are very interested in is the fact that a mobile payment transaction, on average, has a ticket value that’s 15 percent greater than a typical credit or debit transaction. That’s a hard piece of data that we’re putting in front of customers now. In addition to the other benefits that come with things like Apple Pay, that 15 percent incremental bump for a mobile-based purchase is an encouraging piece of data.


KW: Yes, that’s a really good sales testament to enabling mobile payment and it sounds like, for Apple Pay, in particular. Where do you see usage being more concentrated? Do you have enough data to say it’s at one type of establishment versus another?

SH: Currently, I believe we have that data. It’s information that we want to get out to the marketplace, but we need agree with the third parties that it’s information we want to put out.

But, taking your question a step back into cashless – for instance, cashless payment availability that’s still in its early days – I mentioned that our customer locations are ubiquitous. We track 52 different sub-channels. An example of a sub-channel might be a military base or a mall or a retail location. On some military bases, the uses of credit and debit versus cash, credit and debit is 80 percent of purchases.

I think what we’ll find in the market is a significant difference in percentage of transactions that are mobile versus credit and debit versus cash.


KW: Let’s talk a little about loyalty. Apple Pay as it is today is really only about the act of payment. How do the offerings that you enable as part of your holistic solution complement what Apple Pay enables with respect to payment?

SH: I love that question!

First, the real value in mobile payments in terms of the value chain all the way from the consumer to someone handling the payment does not necessarily have to do with the payment itself. It’s the opportunity to get closer to the consumer. Recognizing that, we’ve created an infrastructure and a program so that our customers can do that. We call that more.

It’s not only a loyalty program, but also a program whereby our customers can have location-based offers pushed to consumers. They can also have discounts pushed to consumers, and promote products in specific locations for consumers. This is an infrastructure that we built out, and it’s something we’re actually using and we’re working with Softcard right now in delivering to 85,000-100,000 locations both mobile payment and loyalty.

We believe we’re very much ahead of the curve in terms of being able to add to something like Apple Pay the ability to bring those exciting things to consumers. Loyalty is one of them, but I think what consumers might value more, based on the research we’ve seen and where loyalty is headed in general, are some of the more forward-looking things like location-based offers.


KW: I think that makes a lot of sense, especially in this segment where that could drive a lot of awareness and usage of the various sub-channels of your merchant footprint.

Let’s talk about the future and where you see this technology, being mobile and specifically Apple Pay, evolving to over the next year.

SH: Well, first of all, what we would like to do is drive additional merchant locations for not only our company, but for Apple Pay. We certainly see an expansion of merchant locations and in addition to that, we’re going to work very hard to move some of the value-added services that might generate consumer excitement and further adoption of things like Apple Pay through our more. program.

In a nutshell, we see driving merchant locations and driving adoption as key things that will happen over the next year. We believe that Apple will have a very compelling vision for some sort of loyalty and offer-based scheme – but, of course, we don’t know for sure.

But, we are positioned nicely for whatever that might be and have built out the whole infrastructure for that. It doesn’t have to be called “more” but I would think that a program with the Apple brand on it might have a little more traction than we would.

Just a guess.




Stephen P. Herbert
Chairman and CEO, USA Technologies

Mr. Herbert was elected Chairman and Chief Executive Officer of USA Technologies in December 2011 after serving as interim Chairman and CEO since October 2011. Mr. Herbert has served on the USA Technologies Board of Directors since April 1996, when he first joined the company. As USA Technologies’ President and Chief Operating Officer from 1999-2011, Mr. Herbert oversaw all operations of the company, including network operations, sales, marketing, research and development and manufacturing. Prior to joining USA Technologies and since 1986, Mr. Herbert was employed by The Pepsi-Cola Company, the beverage division of PepsiCo, Inc., where he held several management positions in operations, sales and marketing. In his latest assignment at PepsiCo, Inc., Mr. Herbert was responsible for the development of market strategy for the vending and retail channels for Pepsi-Cola in North America. Mr. Herbert graduated with a Bachelor of Science degree from Louisiana State University.


To listen to the full podcast, click here.




New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.