Cashless transactions are fueling USA Technologies
Source: Evan Bakker
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Self-service payments provider USA Technologies (USAT) announced strong growth in its Q3 2016 earnings report this week.
The firm now counts 11,050 customers and has over 429,000 self-service or unattended payments devices, like vending machines and kiosks, connected to its ePort Service. For context, the firm counted just below 11,000 clients and 401,000 connected terminals at the end of Q1 2016.
One notable component of USAT’s earnings report is the value that converting machines to accept cashless payments may be bringing.
Many of USAT’s clients, like vending machine providers, are looking into going cashless, which can be accomplished through USAT’s ePort product. It’s likely that cashless offerings are becoming more popular because of the gains they provide the firm — one company that upgraded to cashless saw a 32% increase in sales, according to CEO Steve Herbert in the company’s earnings call. And when support for Apple Pay at a given machine was advertised, firms saw a 26% increase in overall transactions and 12% increase in average ticket size, therefore demonstrating the ROI in migrating to cashless.
That could be boosting volume. The upgrade to cashless is likely driving some equipment sales revenue, which increased by $6.4 million to $20.8 million in the company’s fiscal year. But more notably, the firm’s transaction and licensing revenues, grew by 29% to $56.6 million in the fiscal year. That could be somewhat related to the transaction and ticket size increases that the firm is getting as more vendors move to cashless.
Mobile payments are becoming more popular, but they still face some high barriers, such as consumers' continued loyalty to traditional payment methods and fragmented acceptance among merchants. But as loyalty programs are integrated and more consumers rely on their mobile wallets for other features like in-app payments, adoption and usage will surge over the next few years.
Evan Bakker, research analyst for BI Intelligence, Business Insider's premium research service, has compiled a detailed report on mobile payments that forecasts the growth of in-store mobile payments in the U.S., analyzes the performance of major mobile wallets like Apple Pay, Android Pay, and Samsung Pay, and addresses the barriers holding mobile payments back as well as the benefits that will propel adoption.
Here are some key takeaways from the report:
In our latest US in-store mobile payments forecast, we find that volume will reach $75 billion this year. We expect volume to pick up significantly by 2020, reaching $503 billion. This reflects a compound annual growth rate (CAGR) of 80% between 2015 and 2020.
Consumer interest is the primary barrier to mobile payments adoption. Surveys indicate that the issue is less the mobile wallet itself and more that people remain loyal to traditional payment methods and show little enthusiasm for picking up new habits.
Integrated loyalty programs and other add-on features will be key to mobile wallets taking off. Consumers are showing interest in wallets with integrated loyalty programs. Other potential add-ons, like in-app, in-browser, and P2P payments, will also start fueling adoption. This strategy has been proved successful in China with platforms like WeChat and Alipay.
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