Vending machines that take debit and credit cards have been making their way into the marketplace. Unfortunately, the prices for products delivered by these machines is generally higher than traditional “coin-op” machines. While many users may believe that the price increase is related to the cost of the machine, which may also have touchscreens and advanced software, in reality the product price may be jacked up due to higher transaction costs.
An unfortunate side effect of the Durbin Amendment is that credit card associations eliminated “small transaction discounts” which means that transaction fees for inexpensive high volume purchases went from 6 cents to 21 cents on debit cards. Why? For one thing, the discount for small transactions was meant to encourage debit and credit card use, which is now commonplace. Secondarily, the “cap” of 21 cents per transaction meant that banks, who were taking 44 cents on larger transactions, needed to make up the difference somewhere. Credit card enabled vending machines are an unfortunate piece of collateral damage in a regulatory effort to help consumers.
What’s the difference for the consumer? Higher prices are the order of the day, so a bag of potato chips which once cost 50 cents now costs 90 cents. DVD rental kiosks that charged one dollar now charge around $1.25. Some smarter vending machines offer a discount for cash, but other operators are able to pocket the difference when users don’t choose credit cards.
The irony of increased vending machine prices is that it may discourage business owners from adopting next generation vending machines for snacks, soda, tickets, and other low-cost transactions. Even though these machines feature interactive graphics, contactless readers, NFC , and QR code capabilities, the increased product prices could be seen as a deterrent.
At Capital Processing Network, we strive to keep merchants up to date with retail and banking developments that can expand their reach. The contactless readers and card authorization equipment on vending machines is expected to spur similar developments in the retail sales space. The advantage to contactless payment is that customers will be able to move through lines faster, and the use of debit and credit cards generally leads to more sales vs. cash. As a merchant, understanding customer purchasing behavior can provide valuable insight into accessories and peripherals for your credit card processing equipment, cash registers, and POS systems. Therefore, no matter what the future holds with vending machines, transaction costs, and technology, Capital Processing Network can keep you up to date.