Friday , May 14, 2021

The New Cantaloupe Looks for Renewed Growth in Vending And Adjacent Unattended Payments Markets

With its name change having become official Monday, Cantaloupe Inc. is looking to start a new chapter in the company’s history as it embarks on a strategy to penetrate new segments of the unattended retail market and grow its business internationally. As part of the change from USA Technologies Inc., which was first announced in November, Cantaloupe relisted its ticker symbol on the Nasdaq exchange as CTLP.

One of the driving factors behind the name change, says Cantaloupe chief executive Sean Feeney, who was named CEO in May 2020, was a desire to put the negative baggage associated with the USAT brand in the rearview mirror and reboot the company’s image. USAT’s brand had been tarnished by a series of missteps, including a delay in filing its annual report in September 2018, while its board of directors investigated customer contracts and how business was booked. The company even engaged in a proxy fight with its largest stockholder.

Those miscues lead to the company’s shares losing a third of their value. Eventually, USAT’s inability to comply with its reporting obligations lead to the company being delisted on the Nasdaq. 

Feeney: “We are looking at unattended retail environments to provide consumers a way to pay any way they want.”

“We found that there was not lot of confidence in the USAT brand. There were some bad connotations to it and it was limiting, especially in international markets,” Feeney says. “The Cantaloupe brand, which we own, has great brand recognition, customer loyalty, and positive energy around it.”

USAT acquired Cantaloupe—a provider of cloud-based and mobile technology for vending, micro markets, and office coffee services—for $85 million in November 2017. Cantaloupe’s Seed platform enables vending-machine route scheduling, merchandising, inventory management, and other functions, as well as cashless vending. 

Now, Cantaloupe’s game plan is to expand into markets adjacent to its core vending-machine business, including electric-car charging stations, car washes, and amusement parks. Cantaloupe was making inroads into the latter two markets prior to the Covid-19 pandemic. “We are looking at unattended retail environments to provide consumers a way to pay any way they want,” says Feeney.

As part of its strategy, Feeney says Cantaloupe is looking to add PayPal, Venmo, and cryptocurrency acceptance. Cashless payments have already become a bigger part of the company’s business, rising from 55% of sales pre-pandemic to 66% currently. Adding cashless acceptance to an unattended retail payment device can increase sales up to 30%, Feeney says. Cantaloupe’s Seed software, which supports cashless payments, also helps reduce operating costs by 15% to 20%, according to the company.

Expansion outside the United States is another priority. Potential new foreign markets include Latin America and the Caribbean. The company already does business in Mexico and has operations in Australia. Feeney says the company has been developing an international expansion strategy since he took the helm last year.

Another branch in Cantaloupe’s growth strategy is data analytics. Feeney says the company is looking to provide consumer-behavior data to its customers to help them create targeted promotions and marketing messages. Such data can also help make their merchandise mix more attractive. 

“What’s not often mentioned in discussing payments in vending is the importance of the data coming out of the vending machine,” Thad Peterson, a senior analyst for Aite Group, comments by email. “With that data, the vending machine’s supplier can identify machines that need refilling and what it is that they need to be refilled with. That data can be used to route their delivery vehicles to minimize unproductive stops, which lowers operating costs—and that’s a significant benefit.”

With the Covid-19 pandemic fueling consumer and merchant adoption of contactless payments, and making unattended retail more attractive to consumers, Cantaloupe may finally be in the right place at the right time.

“The rapid growth of contactless payments caused by the pandemic increases demand for cashless transactions in POS, as well as [at] unattended locations,” Peterson says. “Cantaloupe’s offerings now incorporate [near-field communication] as well as EMV, so the level of friction is reduced dramatically, while the security of the transaction increases. Also, unattended commerce is growing as new vending capabilities are developed and concepts like Amazon Go prove the value of the concept.” 

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