self service retail

Vending Machine Commerce Encourages Digital Payments Growth

Visit one of the places where time still crawls — New Orleans, for instance, inside a dive bar where the beer and tobacco odors have more years on them than the regulars — and you might see one: a glass, metal and plastic box squatting along some wall, its coin slot and thick pull-handles ready to serve any boozer in need of quick nicotine.

Cigarette vending machines have earned their place in discussions of Americana and barroom history. They also stand as a marker for all the changes that have come to vending machine retail — including recent developments tied not only to the generally healthier consumption habits of U.S. consumers (maybe not so much in New Orleans, but not every city can be as wonderfully without care as that 300-year-old Mississippi River port), but the rise of digital payments and mobile commerce.

Vending Investment

The latest demonstration of that shift came from Farmer’s Fridge. The Chicago-based startup sells salads and other meals via vending machines, and plans to double its operations in 2019 after raising $30 million in a Series C funding round. The capital will support hiring and the deployment of up to 500 new machines to St. Louis, Cincinnati and other areas. The company operates some 185 machines via which consumers buy 15,000 products daily.

Vending machine commerce — or its reasonable facsimile — is also bringing more than chips, cookies and candies to employee break rooms.

Byte Foods, a vending machine manufacturer and supplier, replaces those break room vending machines with smart refrigerators offering healthy snacks, beverages and even full-fledged meals, according to the PYMNTS Unattended Retail Tracker. Lee Mokri, who founded the California-based startup in 2015 along with his wife, Megan Mokri, noted that this solution could be more than a boost to employees, but also to employers. Workers, he said, can have easier access to fresh, healthy food, while employers get a more productive workforce without breaking the bank.

“Until today, companies have had very few choices when it comes to [offering] food in their offices,” Mokri said. “They could offer nothing, which is what most companies do, or give away 100 percent subsidized food. That’s really expensive, and only about 1 percent of businesses are able to do that.”

Another analysis, this one the PYMNTS and Diebold Nixdorf’s July 2018 Self-Service Retail Study, found that 45 percent of American self-service customers pay with debit cards, while 29 percent pay with credit cards and just 19 percent of the 2,170 respondents reported using cash.

School Food

Schools, too, are relying on vending machines to get healthier food into students’ bodies — at a time when many students face daunting daily schedules of classes and activities designed to make them more attractive to college admissions officials.

In Huntsville, Alabama, for instance, officials deployed new vending machines for the 2018-2019 school year that feature “healthy meals for students on the go … and those meals can serve students even separate from traditional mealtimes,” according to a local news report. “The machines will allow students to use their birthdate and school ID number to access the food. If a student qualifies for free or reduced meals, the vending machine food will be included in that. Students are able to access the machines once per mealtime.”

Digital payments play a big role in modern vending machine commerce, and will continue to do so as the industry tries to appeal to young consumers. Beyond that, cashless machines can lead to more spending. According to figures provided by the National Automatic Merchandising Association (NAMA), card-accepting machines tend to experience a 25 percent to 30 percent lift in sales over machines that do not accept cards. And if those machines offer consumer prompts to buy multiple items, the sales lift can amount to 15 to 20 percent.

Vietnamese Vending

The appeal of cashless machines extends to countries where vending machine commerce is a relatively new concept.

Vending machines used to be a rare sight in Vietnam, given the “poor quality of its paper notes” and related factors, according to a recent report in Nikkei Asian Review. But, in Ho Chi Minh City at least, “vending machines are now sprouting up … thanks to the spread of smartphones that allow for easy digital payments.”

As an example, the report points to five vending machines inside the lobby of the Bitexco Financial Tower, “a 68-story symbol of Ho Chi Minh City,” that do not accept coins or paper money. The machines sells snacks, prepackaged meals and even coconuts wrapped in plastic.

“To make a purchase, consumers must download the Toro digital wallet app on their smartphones and register such information as name, address and phone number,” the report said. “The app will then convert money from a credit card or bank account into digital cash. Customers then use a password or fingerprint authentication to display a QR code that is scanned by a reader to complete the transaction.”

If you want to see a functioning museum piece that offers some puff-puff pleasure along with your drink — and, don’t worry, the drinks are always strong, even if smokers now must go outside — then find your way to a questionable establishment in New Orleans. If you want to see the future of vending machine commerce, how digital payments are combining with healthier food, then you might want to fly across the Pacific and hail a cab to a Vietnamese skyscraper.

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Latest Insights: 

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. Check out our April 2019 Unattended Retail Report. 

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