PayRange, which makes a small device that plugs into vending machines that enables customers to pay with credit cards, said that it has raised $12 million in venture financing.
The company produces a device that plugs into vending machines that interacts with an app. It uses Bluetooth to connect to the app, wherein customers can make a purchase. The device works with basically any vending machine, making it a good way to retrofit existing machines to take credit cards as cash becomes increasingly less commonplace.
“There is a snack vending machine located in virtually every emergency room in this country,” CEO Paresh Patel said. “People often run to the ER without their phone chargers or headphones. At my former company — which was a vending machine operator — we took the same snack machine and removed two food products and replaced with phone chargers and headphones. We priced those items for $12.50 each. The average price of the other items in the machine was $1.25. We could only do this because the machine took cashless payment as almost no one would have had 13 dollar bills on them to make a purchase, since the machines don’t take larger bills like $20s.”
That idea isn’t too far-fetched these days, with many vending machines showing up in airports that sell products like headphones and even iPods. Naturally, those by default require cards, but bringing that technology to lower price points is what PayRange is shooting for.
One particular example of a more robust vending machine ecosystem is Japan, where the technology — and products available — seem much further ahead than the United States. Patel said if the same per capita spending for vending machines in Japan were applied to the U.S., the company’s total possible sales opportunity would rise from $45 billion to more than $150 billion. “This highlights the opportunity and how payment has been constraining the industry,” he said.
“Imagine going into a gas station or a convenience store to grab something quickly and they only took cash,” Matrix Partners’ Jared Fliesler said. “The biggest cash only environments are ones where you’re a regular — because it’s a pain on a regular basis. Before Square, this was the issue with lots of local businesses. Going to your neighborhood coffee shop or store that’s convenient location-wise, but challenging for payment.”