The other day I had coffee with an entrepreneur who has a cool idea: Enable consumers to use mobile money instead of cash at the millions of vending machines that currently only accept cash. Clip a little Bluetooth gizmo inside a machine—install looks super easy—and snap. Done.
Paresh Patel is the founder and CEO of PayRange. An engineer by training, he invested in the vending industry many years ago, and that experience gives him clear perspective on weaknesses in the market. Paramount among them is cash itself. A huge percentage of the service calls that vending machine operators deal with are the result of a money jam of some kind, vandalism, or the need to restock correct change.
Even when the machines work perfectly, countless sales still don’t happen because of the archaic payment system. People still want to buy things but often don’t because they can’t. They don’t have cash, the machine is out of order, or they’ve been denied correct change one too many times to want to gamble anymore. Recent research by Coca-Cola found that 43 percent of people walking up to a vending machine don’t have the correct change to make a purchase.
The form factor is literally the limiting factor. Imagine if you owned a club, and you had this whole lineup of people wanting to get in. Yet your steroids-jacked bouncer is inexplicably refusing entry to almost half of them! The bouncer is present-day payment options. (In the case of machines that accept plastic, many people are suspicious of the security of the transaction, so they don’t bother. And as Patel points out, although expensive devices enabling card transactions have been around for a few decades, only about 5 percent of the machines out there have these systems incorporated, according to the Automatic Merchandiser Magazine.)
At the same time, demand for vending products hasn’t changed. Those elusive millennials, so coveted yet difficult to comprehend? They don’t use pay phones or checkbooks, but they want sodas and Snickers bars just like the rest of humanity. True, research indicating as much is sponsored by industry and should be consumed with the necessary salt grains. But it’s hardly an outrageous proposition that grannies and hipsters alike are as content with quick snack and drinks today as people were 40 years ago. Assuming that’s accurate, Patel may be on to something.
Will this be huge? I don’t really know, and part of me doesn’t really care. Maybe the cumulative value for humanity would be greater if we had a sea change in the nutritional value of what comes out of vending machines, rather than reengineering how we pay those products.
But another part of me is impressed with Patel and his idea. The problem he identified resonated. I mean, who hasn’t had the experience of standing at a vending machine and not making a purchase because you were just one small coin short of the correct amount, or because all you had in your wallet was paper money worth too much for the machine to accept? PayRange is also a cash killer, which means I’m predisposed to dig it. (See book). Like the early days of Square, the company aims to wriggle into markets historically, and often exclusively, ruled by cash.
Yet what is most appealing about Patel’s venture is that it’s… small. Like most entrepreneurs, he wants to make money, probably sums of it that could not be described as small. And by his estimates, the market for PayRange is, again, anything but small. What I’m driving at is the wider discussion about the future of money, or rather THE FUTURE OF MONEY. How we do or don’t buy candy bars isn’t exactly a core component of that caps-lock conversation, a conversation usually dominated by the likes of financial inclusion, mobile banking, and, increasingly, Bitcoin.
Yet Patel’s startup is a good reminder that no sector of the economy will be spared scrutiny and possible upheaval during the mobile-enable monetary revolution now underway. Wherever there is transaction friction, there will be innovation, even inside something as seemingly mundane and unimportant as that vending machine in your office lobby.
At a trade show in Chicago last month, Patel was hoping his tiny staff could land orders for 2,500 PayRange sample units, with the next-step goal of 10,000 by year’s end. But his message to vending machine operators seems to have resonated. After 15 hours at the trade show, Patel had 33,000 orders.
On a completely different note, I want to share some exciting news: Although my fascination with the future of money remains incurable, I recently took some time to explore the future of publishing. The result is Firsthand, a collection of some of my favorite projects from the past decade, remastered for the Web with postscripts, slideshows, video, and more. It includes a chapter from each of my books, as well a dozen longform features from Wired, Nature, and other publications. I hope you’ll check it out!