Candy, soda machines take credit cards


The future of two great American habits - drinking sodas and charging stuff on credit cards - is likely to be increasingly intertwined as vending machines that accept plastic become more prevalent.

It's a concept that inevitably raises questions about when a convenience might become an enabler, encouraging consumers to drink more soda or buy more candy, while spending money they don't necessarily have.

Within the past two weeks, MasterCard and a Coca-Cola bottler have finished rolling out 1,000 vending machines that accept all forms of payment, including credit and debit cards, in the Philadelphia area so consumers with the urge to caffeinate can't be denied if they lack cash.

Their effort to make a tiny impulse purchase easier is part of a larger trend in which credit-card companies are accommodating consumers who prefer to use credit, debit or prepaid cards for small-ticket purchases, even those that cost only a quarter.

Such tiny transactions have been tagged "micropayments," which Visa defines as $2 or less.

"If you need to pop a quarter in the parking meter, can you do that with your card instead?" said Niki Manby, Visa senior vice president of product innovation. "We're looking at the whole gamut."

But the push toward encouraging cashless payments for vending machine purchases worries those who make a living encouraging people to be physically and fiscally fit.

"To me, that's scary," said Dave Grotto, a spokesman for the American Dietetic Association and president of Nutrition Housecall LLC, based in Elmhurst, Ill. "The best thing in life is not having spare change to add more calories to your life. Do I stop at the Snickers bar now that I can have a meal?"

Nancy Castleman, a consumer reporter for, a Web site seeking to educate consumers about credit cards, also is wary of such machines.

"It may be really difficult for people who are already pumping more small change into vending machines than they should," Castleman said. "Snazzy machines selling stuff that is marketed to young people in particular is the last thing we need."

But a recent survey shows consumers are open to the idea of using plastic at vending machines. Nearly a third of respondents agreed with the statement, "I would use vending machines more if I could pay with a debit or credit card," according to an 80-page vending industry study released in December by market research firm Mintel International Group Ltd.

"There is unanimous agreement that card readers will become a prevalent feature in vending machines," said Elliot Maras, editor of trade magazine Automatic Merchandiser, "but the big question is when."

By 2009, as many as a quarter of all vending machines will accept cashless payments, estimates Michael Kasavana, a professor in the hospitality school at Michigan State University whose chair is endowed by the National Automatic Merchandising Association.

Visa said it believes opportunities are particularly ripe in two areas: vending and transit services that are "unattended," where people have to serve themselves.

The company sees promise in such self-service vending devices as airport cart machines, jukeboxes and free-standing kiosks that print digital photos for as little as 69 cents.

Visa also believes transit uses, including subways, bus lines and metered parking, are promising. In June, all 8,300 parking meters in Vancouver, British Columbia, began allowing customers to use their credit cards to pay for parking. Houston is installing about 1,500 meters that will accept credit cards.

USA Technologies, the firm providing the cashless technology in the Philadelphia Coke machine rollout, has found that consumers spend 50 percent more on average at vending machines when they can make purchases using their credit or debit cards.

Credit-card companies believe the potential for increased card use for small-ticket items is enormous.

About 60 percent of U.S. consumers now carry less than $20 in cash, up from 49 percent just three years ago, MasterCard research shows.

And U.S. consumers make more than 350 billion transactions of less than $5 a year, representing $1.32 trillion in total spending, according to a 2004 survey by Ipsos Insight, a market research firm.

The use of credit and debit cards for small purchases has been increasing for years. A major breakthrough came when fast-food restaurants began accepting them. Volumes for Visa in that segment have grown 81 percent a year, from less than $1 billion in 2000 to $17.6 billion in 2005.

But for cashless vending, the road hasn't always been smooth. Some businesses say cashless vending will be limited until card issuers and suppliers reduce their transaction fees, because the fees take a big percentage of the cost of a small-ticket item. And because the cashless machines rely on wireless technology, potential users want to make sure the devices are dependable and not prone to dropped signals.

Consumers also have to become conditioned to use the machines for the idea to work well.

"Just because most people carry a credit card doesn't mean they'll use it in a vending machine," said Maras, of Automatic Merchandiser. "They're not used to seeing it there, and the first time they see it, they're not predisposed to using it."

Becky Yerak writes for the Chicago Tribune.

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