USA Technologies And Coke Bottler Strike Biggest Vending Deal Yet

In the largest agreement so far for deployment of vending machines accepting mag-stripe and contactless cards, USA Technologies Inc. has been awarded a three-year contract that includes supplying card readers for up to 7,500 machines operated by Coca-Cola Enterprises Inc., the world's biggest Coke distributor, in cities across the country. The deal, outlined in a filing USA Technologies made Thursday with the Securities and Exchange Commission, also involves MasterCard Worldwide and its PayPass contactless-payment platform. “This is an industry-defining moment,” says George Jensen, chairman and chief executive of USA Technologies, Malvern, Pa. Under the terms of the deal, the installations of USA Technologies' G6 e-Port device, which reads both conventional mag-stripes and radio waves from cards embedded with contactless chips, are expected to be completed by Aug. 31. USA Technologies will receive from both Coca-Cola Enterprises and MasterCard a total payment of $433 for each G6 e-Port Coca-Cola Enterprises installs. If any units remain uninstalled on Aug. 31, USA Technologies will have to refund a portion of payments from MasterCard relating to uninstalled units, the filing says. Completion of the 7,500 installations by Aug. 31 will net $3,247,500 for USA Technologies. The company will also receive a processing fee of 5% on all card transactions through the vending machines as well as a monthly fee of $9.95 for each machine for which it performs transaction processing. Though potentially rewarding for USA Technologies, which specializes in processing electronic transactions from self-service devices, the agreement took a while to hammer out, says Jensen. “It was some time in the making,” he says. “We paid out dues.” But it could be followed by a number of other deals. “The pipeline is rich as blazes,” Jensen says. The company is already in the process of equipping some 5,000 vending machines with a variety of operators and bottlers, including other Coke bottlers, and has also installed devices at certain exits on the Ohio Turnpike to take contactless toll payments (Digital Transactions News, Dec. 22, 2006). Last year, the company equipped 1,000 other vending machines in Philadelphia with its e-Port device. Jensen will not say how many card transactions he expects the Coca-Cola machines to generate. “We have that [projection] but it falls into guidance we're not giving,” he says. Investors are apparently optimistic. USA Technologies' stock, traded on the NASDAQ, rose 9.6%, to $10.85 per share, on the day.