Can Vending Machine Ads Rescue Apple Pay?

Apple Pay has underperformed most expectations, but there are signs the technology company's iconic brand can draw mobile payment users when the marketing is in the right place.

USA Technologies, a vending machine technology company that has long worked to modernize the way consumers purchase snacks (among other things), has found digital advertising of Apple Pay boosted overall transactions by 26% inside of a year. It also increased revenue 22%, average ticket by 12% and improved contactless purchase revenue 89% for all contactless options.

"The advertising is prompting people to use Apple Pay, and to buy more expensive items and continue to come back," said Maeve Duska, senior vice president of sales and marketing for USA Technologies

Apple Pay was, and still is, expected to be a catalyst for bringing mobile payments into the mainstream. But merchants and consumers have been slow to adopt the app in a substantial way, and Apple Pay is quickly accumulating rivals that are targeting the same market and use cases.  

USAT developed the ads in line with Apple's branding guidelines, including messaging and images in full color that appear on the touchscreen of its self-service kiosks. USAT has 300,000 machines, including vending machines, self-serve retail, laundromats and parking. There are five Apple Pay ads, and the response was beyond expectation, Duska said.

"We thought there'd be a lift. People have a tendency to get drawn in by advertisements, but a 26% increase in sales is big," Duska said.

The result is a "rising tide" of improvements across all contactless payment types, though Apple Pay and Samsung Pay in particular are attracting most of the new mobile payments adoption. Also, the IEEE, an electronics engineering trade group, predicts most transactions will be contactless within the next decade.

USAT has long used marketing to boost non-cash payments at its vending machines. It was an early supporter of the ill-fated — and ill-named — telecom mobile payment venture ISIS; USAT also acquired VendScreen, a cashless payments technology company, to boost its digital content capabilities and make it easier to integrate its services with mobile wallets.

Self-service kiosks are the gateway to using payments technology in other venues, according to Duska, who adds the increased use of Apple Pay at vending machines bodes well for other purchases. "Consumers get used to using the technology," Duska said.

The uptick at self-service machines should also prove beneficial as Apple enables an Apple Pay buy button and TouchID authentication for the mobile Web, Duska said. "If I want to buy something using 'fingerprint technology' it's also an easier user experience for self-service."

Apple did not return a request for comment by deadline.

Apple Pay may still face challenges in boosting consumer adoption, as an uptick in unattended terminals isn't necessarily transferrable, particularly when it comes to stats such as purchase size, according to Zil Bareisis, a senior analyst at Celent.

At a vending machine, consumers are typically limited by the change they have in their pockets and the denominations the machines accept; the same isn't true for purchases made at a cashier, Bareisis said. "Availability of Apple Pay is unlikely to make me spend more than what I would have otherwise spent at the same merchant on a card," he said.

However, the promotion of mobile transactions may lead to more revenue for the merchant if Apple Pay helps attract more affluent customers, Bareisis said.

"It also might lead to more revenues to the issuer if the convenience of Apple Pay leads to cash displacement," Bareisis said.