Cashless system on a snack machine?

[Pbuckler]

I have a couple glassfront drink machines with USA Tech card readers on them. They do pretty well and definitely pay for themselves. However I am wondering if such a system would do equally as well on a snack machine? The drink machines gross $150+ a week at a sorority house. Sometimes half of that is credit sales. After reading posts here about the 5 hour energy shots in snack machines I'm considering a card reader since my experience tells me people use cards for higher priced items or multiple vends that total $2-3

Does anyone have a cashless system on their snack machine? If so how does it do?

[dogcow]

I have a couple glassfront drink machines with USA Tech card readers on them. They do pretty well and definitely pay for themselves. However I am wondering if such a system would do equally as well on a snack machine? The drink machines gross $150+ a week at a sorority house. Sometimes half of that is credit sales. After reading posts here about the 5 hour energy shots in snack machines I'm considering a card reader since my experience tells me people use cards for higher priced items or multiple vends that total $2-3

Does anyone have a cashless system on their snack machine? If so how does it do?

off topic but i am dying to know how people are making money with these cashless systems , typical payment processing you are paying something like 1-2% of gross as interchange to visa/mc + auth fee and  txn fee to the processor ( ~40 cents per transaction avg, not including fees for failed auths) , and around $10-12 for a statement fee and i assume you meet monthly minimums.

now add to that the cost of the wireless service which i assume isn't free, though i'm guessing the reader equipment was free (usually POS equipment is free or you can negotiate to get it free, for a retail store anyway) how can this be profitable on an item like a bottle of soda.

At say  $1.25 vend price maybe it cost $0.75 to buy , so you are at $0.50 margin and then paying 1% of GROSS to visa/mc so thats now whacked down to 49 cents profit. i have no idea what a txn fee is for this kind of thing but  at 49 cents profit per vend even a 10 cent txn fee is brutal...and all of this is before tax (7% here) and assuming nobody does a chargeback. To me it doesnt seem worth it what so ever.

what am i missing? is the structure of these systems pricing completely different than typical merchant account pricing or what?

[Sparta_Automation]

I have the same readers on two snack machines....and they do ok.  Typically they say that you're avg sale should be $1 or more for cardless to be cost effective.  In my snack machines, I have chips at $1, 5-hr energy at $3, tuna at $2.50...etc, so it makes sense to do it.

Now for Dogcow's question:

USA Tech charges either $9.99 a month for cellular connection, or $6.95 for internet connection back to their servers for transaction processing.  This is the only "monthly recurring fee" that they have.  Now, in addition to that charge, you are charged either .05 per transaction or 5.99% (which ever is greater).  So, on a $1 sale, you will give them 6 cents on that sale.  No other charges apply.  You have a secure website to logon and view transaction history, do reports etc.  They also handle customer service questions if someone calls about a charge.

Typically, they batch your sales nightly, or more often, but they only transfer monies to your account when you have a machine hit $25 in weekly sales.  At that time, they will transfer all money for your accounts.  For example:

Week 1:

Machine 1 = $5.00 in sales for the week

Machine 2 = $18.00 in sales for the week

No deposit made that week

Week 2:

Machine 1 = $4.95 in sales for the week

Machine 2 = $10.00 in sales for the week

Since Machine #2 went over $25, then will take out the 5.99% and tranfer money for all machines under your account

Hope that helps.

Travis

[dogcow]

USA Tech charges either $9.99 a month for cellular connection, or $6.95 for internet connection back to their servers for transaction processing.  This is the only "monthly recurring fee" that they have.  

$10 per machine  per month? or $10 per month no matter how many machines you have on wireless?

also what kinda location are your machines at if you dont mind me asking?

[nrpick44]

Just curious but what are the startup costs on this? Is it per machine?

[Sparta_Automation]

That is per machine....

I have 4 machines in an office building, has about 300 employees and alot of foot traffic

I have 2 machines in a health care buildings, hs about 80 employees (staff access to machies only)

Start up cost is either $200 for a creditcard strip reader or $360 for a creditcard strip reader and one that is also able to read the contactless zip cards.

Travis

[dogcow]

That is per machine....

I have 4 machines in an office building, has about 300 employees and alot of foot traffic

I have 2 machines in a health care buildings, hs about 80 employees (staff access to machies only)

Start up cost is either $200 for a creditcard strip reader or $360 for a creditcard strip reader and one that is also able to read the contactless zip cards.

Travis

Did you have the machines installed before you put the cardless system in, if so did you find the volume lift justified the cost of the machines?

[RJT]

Unless they require you to install card readers on the front end why not try it without them for a few months and see how it goes. If it goes well then invest in the card readers if you think it will boost your sales.

Backing off now....

[Pbuckler]

I saw a 30-50% increase depending on the time of year at my Sorority location.

[mission vending]

I've got 5 of them from USAT. All of mine are currently on glassfront machines and yes sales went up easily 25% at three of the locations after I installed them at existing locations. The other two went into locations already equipped with the units so I don't know if sales went up.

[mission vending]

Unless they require you to install card readers on the front end why not try it without them for a few months and see how it goes. If it goes well then invest in the card readers if you think it will boost your sales.

Backing off now....

I beg to differ on this, if you install them at a location you better plan on keeping it there. Once they get used to it you will catch all kinds of grief trying to remove it to the point where they might go find someone that will give them another machine with one. That's how I got one of my accounts. 

[shanipaqman]

I'm new to the forum but not to cashless as I have been using them on my ice cream machines for 3 years now.  I would say that you better have high traffic areas to justify the cost because it does take away from your bottom line.  My average at hockey arenas and mall locations is10% use cards, 90% use cash.  That is over the 3 year life of these devices.  My products are $3 each so I can absorb it plus I need the text alerts when power goes out or a freezer door gets stuck open so I can save my product in time so for me I have to do it.

I use www.inonetechnology.com and they are great. 

Shannon

[Pbuckler]

I compared inone to usa tech. Inone charges less for

higher dollar items. They have a sliding scale. USA tech charges a flat fee with a minimum of .06 fee per transaction. Inone terminals are more than the USA tech Edge device. But like Shannon said, inone includes 4 daily DEX updates sent to you for their standard $11 per month fee.

[Sparta_Automation]

Part of the proposal was that cashless capability be available....so I can't tell you how much sales increased because of the cashless system.  However I can tell you that approx 15 - 20% of my sales are creditcard.

Travis

[RJT]

I beg to differ on this, if you install them at a location you better plan on keeping it there. Once they get used to it you will catch all kinds of grief trying to remove it to the point where they might go find someone that will give them another machine with one. That's how I got one of my accounts.  

Go back and read my post again. I said try the location WITHOUT the cashless first and THEN if you think it justifies the expense THEN install them.

I didnt say put in the card readers and try it and THEN take them away if it dosent work.

It is always easier to add than take anything away from a customer.

This is no different than “iffy” things like ice cream machines, cold food machines, etc. If the account is border line on justifying any type of  that type of equipment I tell them lets try a drink snack first and see how sales go then add the other stuff if it goes well. The cashless system would be the same way unless it is a requirement to get the account.  Then you will have to decide if it what they are asking is worth it from the start.

I would just assume turn down business if it doesn’t make sense.  My motto is always “if it doesn’t make dollars it doesn’t make sense.”

Cashless is great but I would ONLY use it in high volume accounts that justifies the expense and loss of margin. I would put them in large accounts like hospitals, colleges etc where vast amounts of people use the machines. I would NEVER put them in small accounts doing low volumes. If a small volume account (less than 25k a year) required them I would just pass on the account.