Vending machine operators could see 18% sales increase

National Post, Financial Post BE7, -- Monday, May 5, 2003

One day, your cellphone could be your wallet


Solbyung (Stella) Yoon has seen the future of vending machine transactions, and it entails using a cellphone to buy a can of pop or a bag of chips rather than plumbing the depths of one's pockets for the necessary number of quarters.

If Ms. Yoon, president and chief executive of Toronto-based cStar Technologies Inc., has her way, consumers will soon be using mobile phones to pay for vending machine-dispensed snacks, metered parking and even kiosk-dispensed theatre tickets.

The cellphone does a fine job facilitating conversations and text messaging - but it also has the potential to act as a portable ATM, she says.

cStar specializes in two-way wireless data and mobile M2M (machine-to-machine/men) communication products. Its small wireless device, SkyGate, once embedded within a vending machine, can facilitate coin-free transactions for anyone with a cellphone. No longer will a thirsty consumer need loose change to buy a can of pop.

Meanwhile, SkyGate will provide vending machine owners, with regular reports about the operational status of their machines (for instance, indicating if a machine is out of order due to a jammed coin). As well, it will give a precise, real-time stock count.

"[SkyGate] offers more convenience to the customer and will allow [a vending machine operator] to run his business more efficiently, " Ms. Yoon says.

In a nutshell, SkyGate will reduce manual processes and labour costs, while improving data-collection accuracy and reducing machine review times.

She predicts a sales increase of as much as 18% because not everyone has a pocket full of coins, but most people own a cellphone.

Ms. Yoon says the technology is open-ended, meaning it is compatible with any cellphone make and service provider. "[SkyGate] is the next step toward a cashless society," she says.

However, before the Royal Canadian Mint can be shuttered, there are some details to be ironed out. For example, negotiations are underway with cellular service providers to create billing systems that will allow consumers to add other charges to their cellphone bills, Ms. Yoon says.

Also, the services will not be free to consumers. While charges have yet to be confirmed, Ms. Yoon says the fee passed on to a consumer buying a pop at a vending machine would likely be about 10.

There is also the matter of getting vending machine operators on board. A SkyGate unit will cost less than $500, but Ms. Yoon says it will more than pay for itself by helping operators run their businesses more efficiently.

Thirsty? Out of change? New wireless technology makes it possible to dial a drink from a cellphone.


And because the device is wireless, the operators need not be concerned with hooking their machines up to telephone lines (which can be problematic if the units need to be relocated).

Installing a SkyGate device takes only 10 minutes, she says.

Srdjan Milutinovic, cStar's vice president of systems development, says SkyGate offers constant feedback to an operator, transmitting data to the head office computer.

"[Vending machine operators] will be able to schedule their trucks' routes based on each vending machine's needs. It will take all the guesswork out of inventory management and save [the operator] so much in terms of time and labour costs," he says.

Ms. Yoon predicts cellphone-enabled vending transactions will lead to a proliferation of machines offering non-traditional (and more expensive) products. For example, a vending machine at cStar's Toronto office features a variety of pharmaceutical products ranging from Rolaids and Echinacea to Tylenol and Band-Aids.

"If you had something to vend for $20, nobody carries that much change. But if you can buy [the item] using your cellphone, it's no problem," Ms. Yoon says.

The first vending machines equipped with cStar technology will be rolled out in downtown Toronto in July.

And the technology works. Ms. Yoon is quick to offer a demonstration: Standing in front of one of the pop machines at cStar's head office, she punches in some numbers on the dial pad of her cellphone and within seconds, a can of Coke is dispensed - no coins required.

"One day," Ms. Yoon says, pointing to her compact silver cellphone, " this is going to be your wallet.