Please also view this article from IT World Canada

Proofing wireless payments

It's been almost a full year since a wireless technology trial introduced a cashless vending system to the Canadian hospitality industry. The pilot program at Kingston, Ont.-based Ambassador Conference Resort is the first in Canada, according to the companies involved, to combine both mobile phone and card key technologies over a wireless network in the same trial period. All parties involved say that, so far, the initiative has been a success.
Hotel guests access the system by swiping a hotel rook key card through a vending machine's card reader, or via mobile phone, to wirelessly transmit information to directly purchase a variety of soft drink beverages, said Alain Ayotte, director of operations, immediate consumption, Coca-Cola Bottling Co. Guests that participated in the cashless vending machine technology trial had applicable charges appear on their invoice at hotel checkout.
Wireless applications have tremendous potential for the vending industry, a sector that covets mobility, flexibility and reliability. The trial is a joint project that includes Bell Canada, Kaba Ilco Inc., Coca-Cola Bottling Co., Web-based software provider RSI International Systems Inc. and Toronto-based wireless data communication firm cStar Technologies.
The proprietary wireless LAN technology is connected to a multiplex server, which provides additional security and reduces airtime charges, said Stella Yoon, president, cStar Technologies. 
Wireless, cashless systems are still in the early adopter stage but Yoon predicts that the technology will continue to make inroads in 2006. Security is always an issue, she noted.
This isn't 802.11 technology for a variety of reasons, Yoon said, such as distance limitations and signal reliability.
Stamford, Conn.-based IT research firm IDC predicts that wireless LANs and cashless technology, while currently in the early adopter stage, are poised to reach critical mass in a few years. But IDC cautions that some of the obstacles that will have to be overcome for wireless Internet access to become widespread include the perception of inadequate security by end-users. Issues such as buffer overflows which enable malicious users to ultimately code on the affected device haven't yet pose a serious threat in the mobile world. Right now, there is not enough of an incentive (financial or otherwise) to look for such issues in a mobile application, but it may be a potential issue once more end-users start using their phones to pay for items at a vending machine.
Yoon said the introduction of wireless connectivity is projected to reduce the price of operating vending machines, adding that the convenience of cashless transactions should drive sales and encourage end users to make multiple purchases.
Ayotte said the vending machined at the Ambassador Hotel will continue to operate on the cashless system and the firm is looking at expanding the technology to other Canadian locations. "The results we observed were 99.9 per cent system reliability, no instances of potential vandalism to the machines, and most importantly, extremely positive feedback from the hotel in terms of benefits to their guests as well as from the guests themselves," Ayotte said in an e-mail statement.