Bill Recyclers Mean Profits An interview with Chuck Reed, Director, Marketing and Sales at MEI
Why was bill recycling developed?
Bill Recyclers Mean Profits On average consumers do not carry exact change; most carry one or two dollars in coin and bills and then a five and a twenty dollar bill. The consumer has alternatives with convenience stores and so they change their behavior. If a vendor does nothing more than enabling $5 dollar bill acceptance it can save sales up to 10-15% and it goes up if they enable higher bill denominations.
What has MEI’s experience been working with operators?
Operators have not seen fraud to increase after installing bill recyclers. They have seen sales across a wide specturm of placements increase by 10-20%. Bill recyclers also enable operators to win new accounts. Bill breakers go away.
What locations benefit the most from bill recycling?
Locations where consumers are not coming on a daily basis with exact change.
Listen to the interview:
Tom Shivers: I’m Tom Shivers with the Vending Business Show. Here with Chuck Reed, director of marketing and sales at MEI. Today, we’re talking about new technology and bill recycling. Chuck, thanks for being here.
Chuck Reed: You’re welcome.
Tom Shivers: Why was bill recycling developed? Bill Recyclers Mean Profits
Chuck Reed: Bill Recyclers Mean Profits Well Tom, a couple of years ago a couple of business companies decided it looked like there was a problem in the vending industry in terms of enabling higher bill denomination acceptance. There was a concern by the operators that if they started accepting 5s, 10s and 20s that the changer would starve. It was a real concern understandably by the operators that that could result in exact change or sold out situations in the vending machine, that’d be a problem. A couple of companies got together and created what was new for the industry, called a bill recycler. Which is a product that is like a bill validator but stores, instead of just in a cash cassette, stores onto a drum a quantity of bills. Typically up to about 30 bills, although the operator can decide how many it is.
Chuck Reed: The operator can decide to store either one denomination, typically they’re one dollar bills or five dollar bills, one or the other, not both. That technology’s advanced now for the last couple of years. MEI of course in the bill recycling space and has deployed well over 30,000 of these devices now. We’ve moved well beyond just a niche product into something that really does work for an operator. What we find operators telling us is that you know in the old days the line was if the machines cleaned, filled, and adjusted you’ll get the maximum amount of sales. What we’re finding is is that there’s a surprising large number of sales that an operator is missing. Because today a lot of consumers don’t carry a lot of exact change on them.
Chuck Reed: In fact we did a study about two years ago and found that on average about half of us carry the equivalent of about three, one dollar bills or the equivalent in coin. Only about, and most of us have at least one dollar bill on us. The large majority of what people carry on them is say one or two dollars in coin or bill and then a five and a 20. If the vending machines only taking a one dollar bill and some loose change, a number of consumers, in fact as many as half, won’t be able to make the purchase at the vending machine.
Chuck Reed: I think it’s been a surprise to everybody involved. What happens is the consumer has an alternative now. They go to a convenience store, a kiosk, whatever it may be. The operator not only loses that sale for whatever that product was going to be, but they lose a larger percentage of sales because a consumer changes their behavior. If the stores closed more often, the vending machines not able to take their money, then they start changing their behavior.
Chuck Reed: What we have found is by looking at what the consumer is carrying and enabling a higher denomination in bills the vending operator is able to capture a larger percentage of sales. In fact, what’s interesting is if the vending operator does nothing more than just enable five dollar acceptance in a vending machine, which is often times enabled through a dip switch on most bill validators today. They can see sales lifting between 10 and 15%, which is pretty dramatic for doing nothing more than just enabling five dollar acceptance. The number goes up even higher than that if they enable 10 and 20 dollar acceptance.
Tom Shivers: What is MEI’s experience been working with operators?
Chuck Reed: What we found is there was a lot of concern among operators early on about enabling this higher denomination bills and would that result in consumers claiming fraudulently that they had put a 10 or 20 dollar bill in the machine and indeed they hadn’t. Then trying to get money back from the operator. What we have found, that really hasn’t been the case. Operators have not experienced any kind of, see increased fraudulent activity with people claiming higher denomination bills being cheated from the vending machine.
Chuck Reed: What they have found, most operators, is that indeed by enabling five, 10, or even 20 dollar acceptance, they’ve seen sales lifts of 15, 20, 25% or even higher. What’s also interesting is that many of the operators that have a large number of recyclers deployed have seen the sales lift across a wide spectrum of product placements, location placements. Car dealerships, hospitals, amusement parks, locations particularly where there’s a lot of transient activity and people may not have exact change on them and they walk up or they may have a family of four that all wants something to drink. The vend prices say $2.00 each. At that point they have say, almost $8.00 of product to buy. The consumer would prefer to put a 10 or 20 in versus trying to find the equivalent of $8.00 in loose change or dollar bills.
Chuck Reed: We have seen significant increases or operators have seen significant increases in sales and they have also not experienced any kind of dramatic reduction and reliability. Bill recycling today is a very reliable technology, particularly the MEI product. We see very, very little on the way of jam frequency. Operators are increasingly confident in putting recyclers out across a wide spectrum of locations and seeing the benefit of the sales lift. Operators are really thrilled about that as an opportunity for them. It’s also enabled them to win new accounts by being able to go into a new account and talk about taking higher denomination bills, which everybody inherently knows is what they’re carrying them on when they’ve gone to an ATM recently.
Chuck Reed: All in all it’s been a really good experience for most operators. Good sales lift as well as seeing some new placement locations for them. Another thing to point out, which a lot of operators like to point out to me, is that they’ve also been able to eliminate a lot of bill breakers out of their banks. The bill breakers that we use to always have in a vending bank can go away with bill recycling because at that point with the bill recycler, you don’t need to worry about changing out a 5, a 10, or a 20 dollar bill for change. You’re able to accept that bill right into the bill recycler and pay back in bills and coin, just like they would in a retail experience. A lot of operators are excited also about the ability to take bill breakers out of vending bank and save that equivalent amount of capital deployed across a large number of vending banks.
Tom Shivers: I know you mentioned in several locations there, but what locations benefit the most from having bill recycling?
Chuck Reed: Tom what we find is you want to find locations where consumers aren’t necessarily coming to that location every day and therefore would have exact change for the 1.25 drink purchase or the 85 cent snack purchase. Locations where there’s a fair amount of transient activity. Like I said, we find that hospitals tend to be a good location. We hear a lot of good things about them. What we find is that operators are telling us that they haven’t found many locations where recycling doesn’t work. Hospitals, shopping malls, theme parks are wonderful location where you’ve got large families gathering and at some point during the day needing either a drink or some snack product. You have to think about the vend purchases more than just a single vend price. For example, if the drink is $1.50 out of the vending machine and they need four of them. That’s not $1.50 vend price to them, that’s a $6 vend price. That’s the way they treat it and that’s the way the operator needs to treat it. In that case, as I said earlier, since most of us don’t carry that amount of exact change or coin on us, it’s important that you’re able to take a 5, 10, or even a 20 dollar bill. That’s really what the consumer has on them and they consider that $6 vend worthy of putting in a 5 or a 10.
Chuck Reed: I think we’re all past the days of lamenting about how customers wouldn’t put in a higher denomination bill into a machine. I think we all go to a store wherever we live and we put into the self-check kiosk 5, 10s and 20s already. Consumers are well trained on putting in larger denomination bills into a machine and fully expecting good reliability. Again, wherever there’s a large group of people that gather where they may not necessarily have exact change, you’re going to find bill recycling’s a great alternative way to enable higher denomination acceptance. Not worry about the changer starvation and really capture the sales you otherwise would have lost when the consumer simply wouldn’t have the means to make that purchase.
Tom Shivers: Well, Chuck thanks for sharing. Any little thing you want to share about MEI with us?
Chuck Reed: I think MEIs excited about introducing some of these alternative payment technologies. Obviously, we’re here to talk about bill recycling today but we also provide cashless products to the operator base as well. I think what’s important for the operator to understand is that MEI has a proven track record of developing very robust, reliable alternate payment technologies. I think operators need to take the time and take advantage of what’s been developed and try to change up their offering to marketplace so they can capture new accounts, retain the accounts they have, and more importantly capture some of the lost sales that are otherwise are walking away and going to a convenience store, a kiosk, wherever else a consumer has to go to make that retail oriented experience.
Tom Shivers: You’ve been listening to Bill Recyclers Mean Profits at the Vending Business Show, a publication of A & M Equipment Sales. For more Vending Business Blogs USA TECHNOLOGIES ePORT G9
