Watershed year for cashless vending expected to continue

2020 marked a turning point for cashless sales transactions, as the number of digital payments per machine exceeded cash payments for the first time. The growth should continue.

Image courtesy of Cantaloupe Systems Inc.

Cashless has been on the rise since the technology was introduced into vending machines more than a decade ago.

However, 2020 marked a turning point as the number of digital payments per machine exceeded cash payments, according to a joint study by Cantaloupe Systems Inc. and Michigan State University. In April 2020 there were 137 digital transactions compared to 135 cash transactions per machine.

Cashless transactions might not have been much higher, but the volume was a different story.

In April 2020, the digital sales volume per machine averaged 47% higher than cash – $ 235 versus $ 160.

But that’s not the end of the story.

By November 2020, the average number of cash payments had dropped from 52% in November 2019 to 40%.

Contactless transactions are increasing

Meanwhile, contactless credit card usage as a percentage of digital payment transactions rose 57% from 14% in November 2019 to 22% in the same month in 2020, with magnetic stripe credit cards falling 9% over the same period – 86% 78% of total payments.

The study evaluated sales and transaction data from around 122,000 vending machines connected to Cantaloupe’s digital payment platform in the United States

Elyssa Steiner believes that cashless sales will continue to grow after the pandemic.

“We have been reporting on the growth of digital payments and ATM transactions for years. However, our research shows that digital payments became the overall preferred method as consumers sought contactless payment options during the pandemic, as evidenced by the specifics of increasing contactless credit card usage, “said Elyssa Steiner, Cantaloupe’s vice president of marketing, in A prepared statement. “Now we believe that the ATM operators connected to our digital payments platform will benefit not only from increased sales and transaction volume, but also from more consumer insights that make better decisions about products and prices, streamline operations and ensure that the operators are better off. “Equipped for the future of self-service and unsupervised retail.”

Hospitals, military leadership growth

Hospitals and military sites saw the largest annual increases in digital and contactless payments.

The share of contactless sales within military locations was around 11% in November 2019, but rose to more than 32% in November 2020. Hospitals rose from 15% in November 2019 to 27% in November last year.

Small volume machines or machines with sales less than $ 2,000 per year also saw a surge in digital payments, led by growth in contactless payments. While in 2019 46% of sales were made with magnetic stripe credit cards and 15% with contactless cards, in 2020 57% were magnetic stripe credit cards and 25% were contactless cards. Meanwhile, cash sales declined year over year as a percentage of sales, accounting for 48% of sales in November 2019 and only 36% in November 2020.

Interestingly, transactions per machine for magnetic stripe credit cards and contactless payments increased by roughly the same amount – 11% for low volume machines between November 2019 and November 2020. In November 2019, 43% of transactions were magnetic stripe credit cards, with 20% of a contactless payment method. As of November 2020, 55% of transactions were made with magnetic stripe credit cards, while 31% of the 55% were contactless.

Insights into the management

The following are excerpts from a Vending Times interview with Steiner regarding the study.

Q: Cantaloupe has been studying the growth of cashless payments for several years. Was the growth rate in 2020 higher than in previous years compared to 2019?

A: In September 2019, we exceeded the average cashless transaction volume for the first time with a share of just over 50% of the total transaction volume at a machine. Before the 2020 calendar year, when the COVID-19 pandemic impacted consumer cash use, the number of cashless payments had been growing steadily. In 2019, students reported that the cashless volume increased 11% between January and December 2019.

In 2020 we will see cashless payments accelerate after the pandemic, growing at a rate of 18% in just 11 months from January 2020 to November 2020. In all of our years of analyzing the cashless trends, we have never seen a case where cashless use decreased, so we assume that these trends will only continue or gradually even out as we get behind the pandemic let us.

Q: Did the study separate contactless credit cards from mobile / app-based payments?

A: Yes, the students analyzed the data set for trends in cash, credit / debit, contactless and mobile wallet. While mobile wallets still made up a smaller subset of the total transaction volume analyzed in the study, the students found that mobile recorded the largest percentage change in the average transaction ticket from January to September 2019 (before COVID).

Q: Does Cantaloupe believe cashless money making will continue since the post-pandemic coronavirus pandemic?

A: We definitely believe that cashless will continue or even increase after the pandemic. More than ever, consumers do not want to carry cash with them, pay cash or handle cash. What we are seeing is an acceleration in consumer behavior towards digital payments, which include not only magnetic stripe cards but also tap-to-pay (contactless cards) and mobile wallets. We anticipate that as more technologies seek to improve the consumer experience through digital forms of payment, cashless payments will continue to be the preferred payment method for consumers.

Q: Was cashless use broken down by machine type in the study, ie cold drinks, hot drinks, snacks, chilled, frozen? If so, can you provide any numbers?

A: No, it was not analyzed by machine type, but by location type. The students examined location data that the operator enters into the ePort platform and derived main categories from over 70 types of locations. These were then further analyzed to see how the cashless and cash growth trends differ between different locations. They found it interesting that at some locations such as hospitals, digital sales increased by 15% from November 2019 to November 2020 and contactless payments also increased by 12% year-on-year.

Q: Has Cantaloupe investigated payment options in micro-markets?

A: We haven’t looked at micro-markets. However, I can see that it is beneficial to see if the trends in the micro-markets deviate from traditional vending. Chances are you’ll see higher digital payments in micro-markets as consumers are forced to use credit / debit cards and app-based loyalty programs. In most micro-market applications, cash is only accepted by loading it onto a prepaid card to complete a purchase – no change back to the consumer.

Q: How much will cashless payment transactions increase in vending over the next two to three years?

A: Based on the study and the machines analyzed, the students forecast that the use of digital payments across the total machine volume will increase by 0.63% per month in 2021 and, like the use of digital payments across all machine transactions, by 0.62 % per month is set to increase over the course of 2021. I believe these numbers will level off at some point, but they can continue to hold their ground as consumers simply prefer a safer, faster, and more convenient method of payment.

source https://collegeeducationnewsllc.com/watershed-year-for-cashless-vending-expected-to-continue/