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Coin Vs. Card: The Great Debate

Craig Dakauskas |

In the interest of full disclosure, I’ll preface this column by letting readers know that I’m a fan of card payment systems. I think newcomers to our industry as well as current owners updating their stores owe it to themselves to start with a card payment system on the project plan. That being said, such systems don’t always fit perfectly with every store’s needs.CARDS: THE WAY TO GOLet’s start with the pros of cards. Today’s card payment systems are far better than what was offered even just 10 years ago. More importantly, readers interface better. Gone are early issues of cards not being read because they were slipped too quickly in and out of the reader. (I’m certain many owners had plenty of complaints with first-generation systems.)Another benefit is that systems have become just that, systems. That means manufacturers have built many more accountability and marketing functions into the systems. Cashless payment is only part of what owners are getting with high-tech card systems.Card manufacturers and equipment manufacturers are now on the same page. Machine controls and card readers work well together, and many manufacturers now offer open architecture, enabling full functionality of their controls with any card reader on the market.Don’t overlook the major advantage of these systems that has occurred because of increased industry acceptance. As more storeowners have installed the card payment systems, manufacturers have, due to this growth in sales, grown their own organizations, which means a larger sales and support network. This is a bonus that only comes via growth through widespread acceptance of the technology.Security also becomes far more focused. Instead of having to worry about vandalism on 100+ machines, owners need only make sure their VTM is secure. Card systems also provide “float,” meaning owners get money up front, perhaps weeks before the total is used.If you provide drop-off service, you can gain a better accounting of the service, particularly if the offering is provided contractually with an independent provider. Owners can easily incorporate customer loyalty programs. Perhaps even more important, card systems make it easy to implement incremental price increases by pennies. We’re all aware of the volatility of utility rates during the past few years. Incremental pricing enables owners to adapt quickly to changes in their cost structure, instead of waiting to raise prices by a quarter.ON THE OTHER HAND...Now the downside. Obviously, up-front costs can turn owners away from this innovation. Purchase cost for a system can range from $20,000 to $50,000 depending on the store’s size and other variables.What’s your commitment level? Are you and your staff willing to learn how the system works, and pass that knowledge on to the customers? We live in a cashless society, but customer education is required.Card stores will generally lose, what I call, transient customers. Vacationers or visitors passing through your area (for work) likely want to pay cash for their laundry, and not have to hassle with figuring out just how much they need to charge to a card so as not to waste money on a card they won’t use again.While these customers won’t make up a major part of your client base, the possible loss of this revenue is still something to consider. The obvious counter to this scenario is a well-trained, trustworthy staff, who can accept cash and start machines for these customers, thus eliminating the need for the customer to put value on a card.WHAT WORKS FOR YOU?These are only a few of the pros and cons of going cashless. More importantly, how do you know if you should add a card payment system? When I field this question from a new investor, my answer is always, “Let’s first discuss your exit strategy.” This is something I believe many distributors overlook.For example, if the exit strategy is to build one store and sell it within three to five years, a card payment system may help you reach a higher selling price when you want to exit. If you are a long-term investor or someone pondering a multistore operation, I say let’s dig a little deeper.What are your potential competitors doing? If they are largely card stores, I’d lean toward doing the same and focus next on the equipment control features. If they are mostly coin stores, you may have to dig deeper in the demographics. Close proximity to a college makes cards a simple choice; students are acquainted with such systems through their college ID card.Owners also need to explore their level of management. Card systems and high-feature controls open up a wealth of management and marketing opportunities for owners who are computer-savvy and committed to running the business. Technology helps owners work more efficiently, but it still involves work. It also involves education. That means making time to learn the system and train employees. Success cannot be achieved unless your staff is up to speed on the system and can assist customers.In short, the question of card versus coin does not come with a simple answer. Owners must examine their anticipated level of involvement with the investment, compare what the competition is doing in the same market, and closely study the demographics. I’d also encourage them to network with other experienced owners and poll them on what they think about payment systems.A word of caution: Beware of distributors who push card systems from the start and present no other options. Like I said at the beginning of this column, I am a proponent of these systems, but one size definitely does not fit all. Quite simply, there are areas where coin payment options just make more sense.So, do your homework, and make sure the system you choose matches your business needs. The combination of today’s card payment systems and advanced machine controls can set up stores for success well into the future. But unless owners are committed to harnessing all this technology, their investment may not hit ROI goals. 

About the author

Craig Dakauskas

Commercial & Coin Laundry Equipment Co.

Vice president

Craig Dakauskas is vice president of Commercial & Coin Laundry Equipment Co. in Gulf Breeze, Fla. He has 12 years of experience in the industry.

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