How Does a Cashless POS at a Vending Machine Work?

January 10, 2023 | By Cantaloupe, Inc.

How Does a Cashless POS at a Vending Machine Work?

Less people are carrying physical cash around these days. Instead, they’ve transitioned to more secure and convenient cashless forms of payment, such as debit/credit cards and mobile wallets on their cellphones. 

For the vending business, cashless payments are becoming increasingly more common. In fact, cashless transactions make up 62 percent of vending machine transactions, and that trend is continuing to grow. Because of that, it’s a no-brainer that more operators are equipping their vending machines are cashless point-of-sale (POS) systems. But how does cashless POS work on a vending machine? And how can you integrate cashless vending into your business? 

What is a cashless POS system? 

Once upon a time, the only way for anyone to make a purchase was with cash or check. But the internet changed everything. Now, consumers have the ability to use digital technology at the point of sale, and businesses can accept electronic payments. With a swipe, tap, or scan of a barcode, money is exchanged at the bank level for products and services. The process is simple and quick for customers and operators alike. 

How does cashless POS at a vending machine work? 

While consumers and operators only see the payment or deposit of money between accounts, a cashless POS system depends on the sending and receiving of data points from multiple sources. It’s a bit more complex than you might think. So what happens behind the scenes? 

The card reader 

The process of purchasing an item through a cashless POS system starts with the card reader.  

For a physical credit or debit card, the card reader will process both magnetic strip (via “swipe”) and RFID chip (via “dip” or “tap”). RFID chip readers allow the “tap and go” feature where you hold the card up to the reader, and it scans the chip via a proximity reader installed in the card reader itself. Many banks are transitioning to using RFID chips in their credit and debit cards because they’re more secure for the consumer and the operator. 

Contactless payments can also be completed by holding a cellphone or digital watch to the card reader. The customer’s card information is stored in a digital wallet (like Apple Pay or Google Pay), and the payment is transmitted to the card reader via the NFC chip installed in the mobile device.  

Data transmission 

When a card reader accepts a purchase at a vending machine, the purchasing data (payment information, info about the product sold, the transaction amount, etc.) is transmitted to the credit card processor for approval through a payment gateway using an encrypted cellular data connection. This can be done through a Wide Area Network (WAN) connection, which covers a wide area, or by setting up a Local Area Network (LAN), which covers a smaller area but is more cost-effective. 

Why use a cashless POS on your vending machine?

Cashless card readers are by far the most convenient point of sale for consumers at vending machines. For one, consumers spend more when they pay using cashless payment methods. This opens the door for operators to offer a greater variety of items for sale, including higher-priced products. 

Not only do cashless POS systems remove friction in the payment process, but they also leaves a paper trail for consumers and operators to reconcile the transfer of money and goods more easily. For instance, if a product doesn’t vend, it’s easier to verify and process returns. 

For operators, using a cashless POS system also means you get paid quicker. Instead of visiting each machine on a daily or weekly schedule to collect bills and coins, you get paid almost immediately for each transaction. And you’ll have a digital record of every transaction, which gives you more visibility into your business performance and know which products are moving at each of your machines. 

All this to say: If you don’t have cashless card readers installed on your machines, you’re missing out on a significant amount of revenue. And it’s easy to onboard with a cashless POS system for your vending business. 


Cantaloupe, Inc.

Cantaloupe, Inc. is a digital payments and software services company that provides end-to-end technology solutions for the self-service economy.

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