Success of Cashless Vending

Transaction Network Services, one of the largest data communications firms specializing in the payment industry, has partnered with Pepsi-Cola North America to be the company's exclusive provider of wireless transaction service technology. Last year, Transaction Network Services acquired certain assets of U.S. Wireless Data Inc., a provider of wireless transaction services that filed for bankruptcy protection in March 2004. Among those assets was the "Synapse" cashless payment platform which was then specifically developed for Pepsi-Cola's vending machines after successful beta testing.

As an interface, "Synapse" connects merchant acquirers, credit card processors, and their customers. Transaction Network Services moves the necessary data between machines and acquiring banks that provide merchant services. Since "Synapse" is a wireless technology, there is no need to hardwire equipment, nor is there any impact on local area networks. Installing "Synapse" on machines only requires fifteen minutes. The main components of this technology include a box, called the "enabler," and an antenna. The enabler mounts in the vending machine and "talks" to the vending machine's DEX-capable credit card device; the antenna sends and receives data. "Synapse" supports both credit and debit card media. After a card is swiped, data is sent to the enabler and then transmitted to the card processor for authorization. This cashless vending process only takes three or four seconds and the sale is then reconciled just like a cash or coin transaction.

Transaction Network Services is planning to introduce a major upgrade to the "Synapse" system in the next few months by adding GPRS technology. GPRS, or General Packet Radio Services, is a packet-based wireless communication service that provides data rates from 56 Kbps up to 114 Kbps and continues connection to the Internet. This GPRS wireless protocol is global and has already become the standard outside the United States. This enhancement would enable Transaction Network Services to expand cashless vending options worldwide.

Currently with business growing in the United States, Transaction Network Services installed "Synapse" in 750 of Pepsi-Cola's soft drink vending machines. By the end of the year, 10,000 of Pepsi-Cola's cold drink vending machines have been slated to be installed with this technology. Most of the vending machines currently equipped with this technology have been placed in high-traffic locations in Las Vegas, Chicago, Memphis, and Orlando. On average, Pepsi-Cola has seen a 17% increase in sales since offering customers cashless vending options. It has been reported that the cashless vending option captures around 25% of all vending sales.

According to Transaction Network Services, since adding "Synapse" to vending machines, Pepsi-Cola North America has won key accounts and has been able to negotiate premium price placements in those markets. For example, cashless vending capability was the deciding factor in awarding a contract to Pepsi at the Memphis Zoo. By allowing cashless vending opportunities, Pepsi has also been able to increase product costs. For example, in a prominent Las Vegas hotel, Pepsi increased vending prices from $1.50 to $2.00 for 20-oz bottles. It has been reported that the cost of upgrading the machines was recovered in three weeks.

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