Against this background, it is difficult for companies, such as vending operators, to develop strategies on the forms of payment they should adopt, and which ones they should abandon. The EVA will be trying to shed some light or at least ask the right questions - for want of definite answers - at its upcoming conference on 11th -12th September in Brussels.

So what's the situation of payment today and what can we say about its possible development tomorrow? As indicated in a recently published study entitled "The Future of Cash" (published by Agis Consulting and jointly sponsored by Scan Coin and Innovia Films), there has never been so much cash around in Europe.

In the euro area, cash has grown by 175 per cent in six years of euro circulation, and cash in circulation accounts for 8 per cent of the GDP (up from 4 per cent in 2002). Cash is the most widely used payment instrument, covering 8 out of 10 transactions in the euro area today

Why such growth? The study goes on to illustrate that 3 factors can explain this phenomenon:

• Hoarding: only a small portion of cash in circulation is actually used in transactions
• International use of the euro by non-residents, as the euro has grown into becoming the second global currency after the US Dollar
• Low-value transactions for which cash remains the most efficient and convenient tool for small payment

Cash is, nevertheless, being challenged by ‘new' payment instruments (and has been for quite a while), with attempts to replace it with prepaid cards and electronic wallets. These attempts have not yet succeeded on a large scale and success stories are limited to certain segments or geographical areas - for example, mass transit cards in Asia (Singapore, Japan and Hong Kong).

However, to date no payment tool can be realistically put forward as a genuine threat to cash in the short to medium term. Nevertheless, payment providers, such as VISA and MasterCard, have developed better and more user-friendly electronic payment tools, which they are willing to impose as alternatives to cash for low value payment (branded respectively as Visa Wave and Paypass). Will they succeed and how fast is the million euro question. Experience has shown that consumers are slow in changing their behavior, but with techno-savvy young consumers who can't live without their mobile phones mp3's and laptops or palmtops, we should be on the lookout for future developments.

What does this all mean for the vending industry? There is no simple answer, because the interests are not necessarily the same:

• Operators want cheap, efficient and reliable solutions. So far, this has meant a single form of payment, most often coins in public sites, and coins or tokens or proprietary cashless in closed sites;
• Payment systems providers want efficient, reliable and secure products, and of course they want to sell their up-to-date, sophisticated payment management tools to a thriving vending industry. Reliability and security is becoming quite a challenge in the euro area, particularly with coins, with potentially 27 euro area countries, at least as many Mints, national sides, commemorative coins, etc.
• Card providers want to find the right model that is at least as attractive as cash, which means that ideally it should be as universal, safe and anonymous as cash. This is also a challenge as fraud is an issue, and what's more consumers don't like their personal details to be gathered and shared by commercial or public entities.
• Consumers want convenience, speed, security, and acceptance of whatever it is they carry in their pocket.

In this context, it is interesting to take a look at how similar industries transact. Both attended and unattended points of sale generally accept at least two or more forms of payment. Compared to these, vending has poor acceptance of more than one, generally coins. Naturally this is due to both the currency situation (the euro has many coins, including high value coins like the 1 and 2?), and the fact that vending is still a relatively low transaction value environment.

But this, too, may change in the future. Higher value products are being tested in vending and hopefully the average price for great quality products should also increase. Should vending then start thinking about broadening the forms of payment it accepts?

In public vending in Italy, for example, it is quite common to accept banknotes and provide change. As public vending increases, this should be taken into account by operators, alongside any challenges that this may entail. What about cards? Should vending accept debit cards, or credit cards, or both? In some airports this is already the case, as travellers often will not have the right change on hand to buy from the machine. How about the newer cards, i.e. the tap and go cards developed by VISA and MasterCard? These are certainly more convenient than their predecessors and are better adapted to an unattended environment, as these no longer require the machine to be on line, have a lengthy authorization process or transaction time.

Whenever these electronic payment tools would be integrated into vending, would it not then be appropriate to think of added plug-in functionalities, such as telemetry and the back-office management tools that they offer?

Might this offer a more attractive experience to the consumer and at the same time boost vending's image? We are all consumers. Wouldn't giving more than one alternative for payment meet with the consumer's approval? And what is the actual percentage of lost sales for not providing these alternatives? Or, in other words, what is the percentage of increased sales that could be made by offering more than one form of payment?

Beyond these questions, what forms of payment will be developed tomorrow and into the future? Will biometrics be developed to the point that it becomes the payment tool we always carry with us? From eye verification to fingertip; which part of our body will become tomorrow's coin and note alternative?

The EVA will tackle all these questions at its conference on September 12th , preceded by a networking cocktail September 11th.

http://www.vending-europe.eu/