Sunday , January 24, 2021

Startup Spindle Launches RhinoPay for Vending And, Ultimately, P2P Transactions

The market for card-based vending machine purchases has hit some turbulence over the past year, but new competitor Spindle Inc. says the niche still has plenty of long-term opportunities.

“I’m not at this point so worried about being different as adding competition,” says Bill Clark, president of Scottsdale, Ariz.-based Spindle. In fact, Clark estimates that of about 5 million vending machines in the U.S., only about 1.5 million are cashless. “It’s an open market,” he says.

Spindle introduced its service, dubbed RhinoPay, at this week’s National Automatic Merchandising Association (NAMA) conference in Las Vegas. The brand will have both a consumer-facing person-to-person platform as well as the service for vending machine operators, which is debuting first.

Clark is far from a babe in the vending and payments woods, and members of his senior executive staff also have experience in payment processing and technology. Clark, who earlier worked at First Data Corp., last year left a senior post at another big player in vending payments, Apriva Inc., to found Spindle. In fact, Spindle is re-selling Apriva’s wireless payment service for vending operators, Apriva Vend, as part of its RhinoPay package. Apriva distributes its services that include a gateway and security and other alert services for machine owners through a network of resellers, including independent sales organizations.

Spindle will try to make its mark in cashless vending by providing one-stop shopping to local and regional vending-machine owners. “We’re looking for the smaller, full-service operators,” says Clark.

Besides Apriva Vend, the Spindle package includes card readers from MEI, a specialist in vending machine hardware components. Spindle’s acquirer is Bank of America Merchant Services, a joint venture of First Data and Bank of America Corp. Spindle is a so-called payment services provider (PSP), which is a transaction aggregator that submits transactions into the networks on behalf of merchant clients that thus do not need individual merchant accounts.

RhinoPay charges a flat transaction fee that Clark wouldn’t disclose. “It’ll be very competitive,” he says.

Spindle’s target merchants typically sell soda, candy bars, and snacks with an average vend of $1.50 to $1.60. Until recently, such small transactions attracted little attention in the payments industry except from specialist companies such as Apriva or USA Technologies Inc., whose wireless network now connects about 148,000 vending machines and other endpoints, the most in the niche. But the Durbin Amendment with its debit card interchange price controls that took effect last October upended the economics of small tickets.

In implementing the amendment, the Federal Reserve set an interchange cap of 21 cents plus 0.05% of the transaction for regulated debit card issuers, those with more than $10 billion in assets and which account for about two-thirds of all debit sales. But both Visa Inc. and MasterCard Inc. turned that cap into a straight rate at the same price for small-ticket transactions, which had the effect of dramatically raising card-acceptance costs for merchants with very small average sales.

After a chorus of complaints, Visa offered an incentive in the form of an extension its pre-Durbin pricing for a year, but MasterCard didn’t. USA Technologies and Apriva have stopped accepting MasterCard debit cards, which have much less market share than Visa debit cards. Spindle won’t accept MasterCard debit cards, either, though it will accept MasterCard credit cards.

Clark believes the networks and the small-ticket processing specialists eventually will come to a satisfactory interchange accord. And even with the pricing issue still unresolved, he believes Spindle has profitable opportunities to exploit. “It’s all about creating a competitor,” he says.

USA Technologies, meanwhile, last week said that its preliminary analysis for its third fiscal quarter ended March 31 shows that revenues will be about $7.5 million, up 36% from a year ago. On Tuesday, however, the company disclosed that a dissident New York investor and former board member, Bradley M. Tirpak, was making a new move to gain control of its board of directors. The Malvern, Pa.-based company said in a statement that Tirpak resigned last month after all of its other board members asked him to step down “due, in part, to conduct they viewed to be detrimental to USA Technologies and prohibited by USAT’s code of business conduct and ethics.” USAT did not provide details about the conduct.

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