RFID News

Philly To Get RFID-enabled Vending Machines

With the backing of Wal-Mart and other corporate sponsors, including ACNielsen, Deloitte, E. & J. Gallo Winery, J.B. Hunt Transport Services and Tyson Foods, the RFID Research Center has emerged as the preeminent RFID lab within academia. (Full disclosure: RFID Journal is a media sponsor of the lab.)

RFID Journal recently spoke with Hardgrave about what the research center has accomplished in its first year and what projects the lab has in the pipeline for the next 12 months. Here is an excerpt of that interview:

RFID Journal: When you look back on the lab's first year, do you feel you've achieved your objectives so far?
Hardgrave: We were primarily focused on the retail/CPG supply chain. We wanted to establish a presence there and set up a lab around RFID applications in that sector. We wanted to advance the knowledge of RFID in the supply chain. I think we've done some good things. The study we did on RFID's impact on out-of-stocks at Wal-Mart was helpful to the industry, and we continue to research around that. The setting up of the lab and research center has been helpful for a couple of reasons. In the first year, we had more than 1,100 visitors from some 500 companies come through the lab. We use that opportunity to educate people about what RFID is and is not. We've helped get people thinking about how RFID can be leveraged, not just in the supply chain but also in other areas. I think we've also helped drive adoption by helping the supplier community understand more about RFID and how it can be used with their products through the testing services that we offer. We've been successful in generating interest among students and faculty here. We've had more than 100 students work in the lab, take courses or work on research projects, and we've had 15 faculty members involved with the lab.

RFID Journal: What new developments or trends are you seeing in RFID?
Hardgrave: Wal-Mart's use of RFID and the suppliers they brought on have pushed RFID forward. But we are seeing many other companies looking at RFID's value proposition. They are doing it because they want to and think there is an ROI there. I think that type of approach will push RFID forward more rapidly in the next 12 months than we've seen previously. In the area of cold chain—temperature and environmental sensing—companies are looking to use RFID because they see a value proposition, and I think they are right. They are adopting the technology on their own terms, and it will move things along rapidly. Tracking big-ticket items is another area. Again, companies [looking at this application] see an ROI. Those two areas will push RFID forward in the next year. That's not to say tracking pallets and cases in the supply chain will be forgotten, but I think we are going to see lots of facilitators in this area, not just Wal-Mart.

Still, according to George Jensen, CEO of USA Technologies, Philadelphia Coca-Cola Bottling and other companies that manage or distribute to vending machines stand to gain increased sales by adding cashless payments to its vending machines. "There's a 20-percent lift in sales when a cash-only machine is changed to one that accepts cashless payments," he says. Plus, the average transaction made at a vending machine with the ability to take credit or debit cards is 50 percent higher than one made with cash, he adds.

Will adding the ability to pay with an RFID card or fob, however, lead to improved sales over traditional credit cards? USA Technologies wouldn't say, and MasterCard refused to release any specific data about sales made with PayPass. "We wanted to see [from the 500 RFID terminals USA Vending installed last year] if there would be traction—and we've seen that there is. The technology is working," says T.J. Sharkey, MasterCard's vice president of business development, U.S., acceptance.

According to MasterCard, this is the largest rollout of RFID-enabled payment technology in vending machines in a U.S. market. USA Technologies began incorporating RFID interrogators into its payment terminals in 2004 to RFID-enable the vending machines used at MasterCard's cafeteria in its corporate office, where PayPass was initially tested.

USA Technologies is based in Malvern, Pa., and provides wireless, cashless, micro-transaction and networking services to the vending machine, hospitality and laundry industries. Last year, the company RFID-enabled 500 vending machines across New York City and Atlanta (see Vending Machines Accept RFID Cards). In these machines, the company installed its G5 e-Port payment terminals, which only process magnetic-stripe payments. The terminals had to be retrofitted to accommodate the interrogator. The latest version of the e-Port, the G6, comes with the interrogator built in. Jenson says the company is selling the G6 for the same price as the G5, to encourage more distributors and vending-machine management companies to install RFID-enabled payment terminals.

Sharkey says Philadelphia Coca-Cola is working with USA Technologies to determine which vending machines will receive the upgrade. "They are looking at places with a lot of foot traffic," he says, "such as shopping malls."

The Philadelphia Coca-Cola Bottling Company is the fourth-largest distributor of Coca-Cola products nationwide, serving 5.6 million consumers. Worldwide, says Jenson, most of the $40 billion global beverage and snack-food vending and kiosk payment industry is currently cash-based. USA Technologies believes the e-Port cashless payment and networking services, combined with the RFID-enabled payment cards being offered by the credit-card organizations and issuing banks, could revolutionize the global vending industry by providing consumers an alternative to cash and coins.