Advances in Cashless Payment Options

RFID (Radio Frequency Identification)
RFID is technology that requires an antenna, a transceiver with a decoder, and a transponder (RFID tag) that is electronically programmed with unique information. The antenna emits low frequency radio signals that activates the transponder, or RFID tag, to set up a direct link between the tag and payment card (i.e., credit/debit card, stored value card). The antenna also acts as a link between the RFID tag and the transceiver, which controls all of the RFID network system's data acquisition and communication. The antenna is commonly packaged with the transceiver and decoder to become a reader, which emits radio frequencies. When an RFID tag is waved near a wireless target spot, it detects the reader's activation signal, decoding the payment data encoded in the tag. RFID tags are commonly embedded in key chains for easy access. A commonly known RFID network is the Wi-Fi network, which transfers data using low-power microwaves.

An RFID payment system on vending machines has already been successfully tested at the 2002 Winter Olympics. USA Technologies, with Texas Instruments, joined Coca-Cola USA to test special RFID transponder devices shaped like classic Coca-Cola bottles. Athletes, coaches, and Olympic game officials were able to purchase soda from vending machines by holding up their Coca-Cola bottle key chains and waving it at a wireless target spot on the vending machine.

In April, Visa and MasterCard announced an agreement on a communications protocol for a contactless payment system through RFID technology. Instead of swiping a card, this new payment system would allow cardholders added convenience by simply tapping or waving their payment card. The data would then be transferred through low-frequency radio waves.

M-commerce features payment capability through one’s wireless device (i.e., mobile phone, PDA) by communicating with a server installed in the vending machine, or through the RF technology mentioned above. The vending machine would be programmed to send a “vend code” to the consumer’s wireless device via the server or radio-frequency link. This “vend code” would then be processed like a credit card, acting as a deferred payment system, where funds are collected by the mobile phone company and then transferred to the vending operator. M-commerce payment options have yet to be perfected in the United States, where each wireless carrier has its own unique hardware protocol.

The Coca-Cola Company has recently won a patent for soda vending machine payments via M-commerce through cell phones and PDAs in the United States. This M-commerce technology has already been offered in Asia and Australia, where there has been a reported fifteen percent sales increase since offering this payment system.

All cashless payment options allow vending operators to analyze captured electronic data that cannot be recorded with traditional cash-only vending machines. This data includes information on sales by product, peak sales periods, and product preference data.

More about the equipment behind cashless vending machines.


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