Cashless payments drive USA Technologies' growth
BI Intelligence
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Self-service payments provider USA Technologies (USAT) announced strong growth driven by increasing popularity of its digital payment offerings, which enable card and mobile wallet acceptance, in its Q1 2016 earnings presentation.
USAT embeds payment services in self-service locations, like vending machines and kiosks, across the US.
The firm’s strong year-over-year (YoY) growth was driven by growth in integrations of ePort Connect, the firm’s cashless payment option.
* USAT added both clients and locations in Q1 2016. The firm now counts just below 11,000 clients, up 21% YoY. And ePort Connect, the firm’s service that enables card and mobile payment acceptance at self-service terminals, posted a 33% YoY increase in connected locations, growing from 302,000 to 401,000. That growth, enhanced by an acquisition, drove USAT’s overall gains.
* 91% of the firm’s new location connections came from existing customers. That signifies that the firm’s existing clients are pushing for cashless services, and likely indicates a trend of ongoing ePort Connect growth.
* Some of USAT’s largest clients are pushing for ubiquitous cashless service integration. USAT believes this is the direction the industry is headed over the next few years, largely because adding digital payment services boosts business for the merchant. As evidence, USAT CEO Steve Herbert remarked last year that average mobile ticket size at vending machines are 15% higher than card- or cash-based payments, which translates to incremental sales gains. Increased interest is leading USAT to offer programs to clients that simplify the process of scaling up to 100% penetration.
USAT's efforts to increase digital penetration at self-service stations could lift mobile wallet adoption. USAT's technology broadens the mobile wallet acceptance network, given that self-service machines are effectively merchant locations. Typical users of vending machines visit them multiple times per day, which affords them an opportunity to make frequent mobile transactions.
This could help increase users' familiarity with these kinds of payments, making them more likely to tap their phone in other retail environments.
The way in which pay is changing rapidly, and self-service banking is just one piece of this increasingly complex ecosystem.
Evan Bakker and John Heggestuen, analysts at BI Intelligence, Business Insider's premium research service, have compiled a detailed report on the payments ecosystem that drills into the industry to explain how a broad range of transactions are processed, including prepaid and store cards, as well as revealing which types of companies are in the best and worst position to capitalize on the latest industry trends.
Here are some key takeaways from the report:
* 2016 will be a watershed year for the payments industry. Payments companies are improving security, expanding their mobile offerings, and building commerce capabilities that will give consumers a more compelling reason to make purchases using digital devices.
* Payments is an extremely complex industry. To understand the next big digital opportunity lies, it's critical to understand how the traditional credit- and debit-processing chain works and what roles acquirers, processors, issuing banks, card networks, independent sales organizations, gateways, and software and hardware providers play.
* Alternative technologies could disrupt the processing ecosystem. Devices ranging from refrigerators to smartwatches now feature payment capabilities, which will spur changes in consumer payment behaviors. Likewise, blockchain technology, the protocol that underlies Bitcoin, could one day change how consumer card payments are verified.
In full, the report:
* Uncovers the key themes and trends affecting the payments industry in 2016 and beyond.
* Gives a detailed description of the stakeholders involved in a payment transaction, along with hardware and software providers.
* Offers diagrams and infographics explaining how card transactions are processed and which players are involved in each step.
* Provides charts on our latest forecasts, key company growth, survey results, and more.
* Analyzes the alternative technologies, including blockchain, which could further disrupt the ecosystem.
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