“Who wants to shop at vending machines?”
When PYMNTS first encountered PayRange CEO Paresh Patel at Innovation Project 2013, he was leading a tiny startup with a big goal: to bring vending into the digital age. Yes, vending — those large, unattended kiosks that typically serve a wide variety of salty snacks and soda and are often found in hotel ice machine corridors. The response from a would-be investor then when pitched his idea was more or less a shrug. Interesting technology, but who cares about vending?
A few years out and PayRange is still a startup that’s made great strides in delivering on its ambition of “reinventing the consumer experience in the world of automated retail.” PayRange and Patel are doing that by making it possible for almost any legacy vending and coin-operated laundry machines to take a digital payment by using its Bluetooth dongle to connect to the internet and its payments gateway.
And as of today (April 19), Mastercard announced that it has partnered with PayRange so that Masterpass becomes a checkout option on PayRange-enabled machines.
Because, as Mastercard’s Digital Payments and Labs Chief Product Officer Betty DeVita told Karen Webster in a conversation shortly before the news broke, the answer to the question, “Who wants to shop at vending machines?” is:
“Millions and millions of people all over the world.”
Step Right up to the Unattended Cashless Retail Future
American consumers, DeVita noted, tend to associate vending machines with a fairly limited array of inexpensive products, like candy. That’s not true for other parts of the world. In Japan, DeVita said, consumers buy hot meals from them — and globally, particularly in markets where shop-based commerce is difficult, unattended retail efforts like vending machines are becoming increasingly popular.
The global scale and variety of retail products these machines can accommodate, DeVita explained, is highly attractive to Mastercard.
Equally attractive, she noted, is the opportunity to digitize automated payments in those machines, which are typically the bastion of cash-based commerce.
“[With vending], we can take an inordinate amount of cash out of the market — and we love that,” DeVita said. “It also enables us to leverage our digital assets like Masterpass to reduce friction in the buying experience,” she continued. “That’s our mission, and with PayRange we can do a lot to help that in the vending space.”
Building for the Legacy
While the digital future of unattended retail has gotten a fair amount of play, the challenge in the segment, DeVita says, is the large number of independent operators that own legacy machines manufactured before anyone ever thought that digital payments would be something they’d need to accommodate.
“What impressed us with PayRange is that they make it possible for existing legacy machines to enable mobile payment without having to wait for new [machines] to be made or asking operators to make major hardware changes,” DeVita observed. “It brings the legacy machines into the IoT connected device world.”
Powered by a Bluetooth dongle that makes the machine able to “talk” to the user’s phone, machines that previously were cash-only become digital once the operator installs the dongle and the consumer downloads the PayRange App and sets up an account. When it comes time to pay — with this new partnership — Masterpass customers can tap and go.
And while vending is the largest use, DeVita noted they are also pursuing a less often thought-of area.
“There are some cool use cases in the commercial laundry space. Yes, billions of quarters are being thrown into these unloved consumer products that are cash-only and give users no other options.”
And, as DeVita told Webster, it’s a great use case for adding a frictionless payment experience to something that otherwise seems destined to remain analog in a digital payments world.
How Laundry Machines Clean Up with Digital
Anyone who has ever used a laundromat and found themselves running low on quarters knows what happens — consumers base their laundry habits on the amount of change they have in their pockets.
“There is research now that demonstrates more transactions are generated in that space because consumers can do laundry the way their mothers would want them to,” DeVita joked. “They can divide out their loads and not throw everything into one machine because they only have eight quarters.”
Moreover, it allows the operators to rethink their service options, such as reserving machines in advance and loyalty programs.
Remote Distribution for Brands
Tomorrow’s unattended retail, DeVita and Webster agreed, goes well beyond laundry and salty snacks. In a world of retail that is reinventing itself, unattended retail offers the potential for brands to use these relatively inexpensive distribution centers that don’t require building a store or paying people to run them.
DeVita says that it’s still early days, but these use cases are already emerging in the global market. High-end hotels and resorts with upscale vending machines that sell champagne by the bottle and offer an assortment of impulse purchase accessories are emerging in high-trafficked tourist locations. Some hotels are even experimenting with gift shops that are “staffed” with unattended kiosks that sell the sundries that would otherwise be available for purchase there.
“How many times have you gotten on a plane for a week away and forgotten something essential, like your headphones, and wanted to cry?” DeVita said. “For people on the go, there are certain items that are essentials. Kiosks in airports or hotels, commuter hubs, office buildings that offer these items, which come at a higher price point and that can be paid for digitally, can easily evolve into micro stores — unattended retail.”
Mastercard and PayRange hit the market on May 1 with 66,000 machines, with more – many more, says DeVita — in the pipeline and ready to go online soon.
“PayRange has global ambitions for their technology, and so do we,” DeVita said. “This is something we’re starting in North America but will be moving into other markets as well.”