Knobias Clip Report (9-19-2007)

Submited From Knobias ClipReport

USAT: Cashless Vendor Could See Legislative Boost

Wednesday, September 19, 2007 17:37ET

Cash has long been becoming a thing of the past. Buying goods and services with credit and debit cards are now favored by many consumers. The added security and ease of use have been the reasoning behind the transformation from the cash less consumer now armed with a litany of plastic. The less handling of change has also been noted as a benefit the consumer prefers. Credit card companies and banks have even started offering products that accumulate the difference in how much products cost the consumer and the next highest, even dollar amount. The electronic change is then deposited into interest bearing accounts ranging from savings to retirement.

Basically, change is becoming worth less than its stated value. The only uses have become paper weights in piggy banks, vending machines, and accumulation for eventual deposit in Coinstar machines, but one of the aforementioned uses is starting to also become a thing of the past.

Vending machine operators have now begun equipping their machines with readers of the consumer favored plastic, and one company is leading the way. USA Technologies, Inc. (USAT) provides networked devices and associated wireless non-cash payment, control/access management, remote monitoring, and data reporting services. The Company’s suite of networked devices and associated services enable the owners and operators of distributed assets (i.e. vending machines, personal computers, copiers, faxes, kiosks, and laundry equipment) the ability to remotely monitor, control, and report on the results of these distributed assets, as well as the ability to offer their customers alternative cashless payment options.

The Company also offers ‘green’ products that can control energy consumption by the vending machines. The Company’s VendingMiser can reduce the power consumption of a cold vending machine by 46%. The VM2iQ technology, second generation, controls the cooling system, allowing the lighting and controller electronics to stay on while the machine is in energy savings mode - saving up to 35% on annual utility costs. Their CoolerMiser product controls glass front coolers with non perishable goods while the SnackMiser controls electricity usage by non refrigerated snack vending machines.

USAT recently announced that the state of Texas passed legislation requiring energy saving devices be installed on all vending machines in all government buildings, including schools and public universities, and state parks. The legislation states that operators of vending machines in buildings owned or leased by the State Government are required to ensure they are fitted with an internal or external energy saving or energy-management device. Operators will be subject to a fine of up to $250 a year for each vending machine found in violation.

The Company also recently announced the latest retail chain to implement their energy saving products. Bed Bath and Beyond announced that they were installing VendingMiser devices to help lower energy consumption and C02 emissions.

The energy efficiency devices aren’t their only products and really aren’t even their main concentration. The Intelligent Vending package is where the Company hopes to get their foot in the vending machines door and then upsale energy efficiency products, but in all reality, it could be the opposite as well. It all depends on the specific consumer’s demand at the time. The Intelligent Vending package allows for the cashless payment solution (ePort) while still accepting traditional payment methods, a live network component that transmits sales data and information allowing owners to view machine performance in real time.

With over 11.5 million vending machines that the credit card companies would love to have paying transaction fees, the Company certainly has a large market to capture. The Company already has Coke and Pepsi as customers and as the two drink giants begin to upgrade their vending equipment over the coming years, USAT is sure to benefit. Investors would be wise to watch.




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