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USA Technologies Inc.'s new Quick Start program, which lets bottlers and other vending-machine owners rent rather than buy its e-Port G6 readers that process magnetic-stripe and contactless card transactions, apparently is delivering the desired lift to e-Port shipments. Malvern, Pa.-USA Technologies today reported that it shipped 7,123 e-Port devices in its fiscal 2008 second quarter ended Dec. 31, up 259% from 1,982 units in the year-earlier quarter. Prices can vary, but Digital Transactions News estimates an e-Port normally costs a deployer about $400. USA Technologies launched the Quick Start program about two months ago at a vending-machine trade show as a way to speed deployments and develop higher-margin recurring revenues. A news release announcing the second-quarter numbers doesn't say how many shipments were under the Quick Start program versus a traditional sale, and the company didn't respond to Digital Transactions News inquiries today. But the presumption is that Quick Start, which claims to charge no money up front and has a $24.95 monthly fee that covers the hardware and e-Port Connect network charges, was responsible for a good share of the increase. “USA Technologies designed Quick Start in response to customer demand for more convenient and flexible financing alternatives, and we have been overwhelmed by how quickly the vending industry has responded,” Mike Lawlor, vice president of national accounts sales, said in the release. “The rapid response from vending operators is confirmation that the vending industry increasingly wants to offer its customers the option of a credit and debit card payment alternative.” The company didn't identify the recent deployers, but said in the release that it “has closed multiple Quick Start agreements and is in advanced negotiations with several dozen vending operators …” The news comes on the heels of a busy 2007 that included a fourth agreement with MasterCard Inc., which has been subsidizing e-Port costs in order to build acceptance locations for its PayPass contactless card and a 7,500-machine contract with Coca-Cola Enterprises Inc. (Digital Transactions News, Nov. 21 and May 31, 2007), Despite its ambitious efforts and growing revenues, USA Technologies still isn't making money, and it's not clear whether Quick Start will lead to a quick turnaround in profitability. Michael Shonstrom, a technology analyst at Emerging Growth Equities Ltd. in King of Prussia, Pa., notes that the program “is a nice start,” but it could take the company years to recover its capital costs on the rented e-Ports. “The story is still in its infancy, development stage,” he says. USA Technologies is taking other steps to improve margins, including contracting with a new, lower-cost e-Port manufacturer and potentially becoming a credit card processor, according to its recent filings with the Securities and Exchange Commission.
