Firm aims "e-payments" for soda machines, meters

And in addition to the soda service, TeleVend also hopes to change the process of "feeding the meter." The company is talking to the city of New York about installing its technology in parking meters to automate payment.

The start-up has been on tour in the United States, showing off technology that would let the thirsty buy products from vending machines by dialing a number on their cell phone or by pointing a handheld computer at the machine. Consumers are billed for the purchase on their monthly phone statement.

"We're converting phones into computers," said Gedaliah Gurfein, vice president of communications for TeleVend. The company, he said, is creating a "shortcut that is using a mobile phone as a credit system."

Other companies ranging from tech giants Sun Microsystems and Microsoft to start-ups like Trivnet and Confinity are also casting an eye toward a time when phones and handhelds act like electronic wallets that can keep track of purchase preferences and account balances.

These companies are eager to get their hands in these electronic wallets because of the sheer number of devices that will be on the market and what they'll say about the buyer. All told, the number of cell phones, handhelds, and other information appliances is predicted to outstrip PC sales by 2002, according to International Data Corporation.

By some estimates, there will be more than one billion cell phones alone by 2005, with a growing portion of those offering the ability to connect to the Internet. Being locked out of a technology could mean a big loss in future e-commerce revenues.

Will it really fly?
Even if the sheer novelty of dialing for drinks or paying for parking from your cubicle isn't sufficient to attract attention to its technology, TeleVend notes that there are increased cost savings and new revenue streams to be realized by using its product.

Soft drink companies such as Coca Cola and Pepsi-Cola would generate savings from better inventory management, as well as gain access to new revenue sources such as advertising, the company said. Gurfein said the high-tech machines can print out coupons for special promotional deals, as well as flash advertisements on an optional screen built into the soda machine. Also, consumers could get discounts on products by prepaying for them.

Existing vending machines can be converted to the new-fangled technology by swapping in what is essentially a large circuit board. The cost of the new system is less than the cost of a regular stand-alone vending machine without the dollar-bill slot, Gurfein claimed.

Greg Blatnik, vice president of Zona Research, said the Internet-enabled coke machine idea has been around for a while. The potential to remotely diagnose problems with machines and take inventory levels, for instance, holds great appeal because of the possible cost savings.

But two key problems stand in the way of widespread use of such electronic payment via phones and other computing devices, Blatnik said. One is that it is hard to get everything to "talk" to each other and share data. Also, consumers "may be resistant to being barraged by more and more advertising," he said, noting that privacy will become more of a concern, too, as companies take purchase information and use it to target ads to their personal preferences.

So far, though, TeleVend claims it is getting reaction from all the right places. Gurfein said the company is in talks with "two big cola companies" to use the technology. TeleVend expects that negotiations will be wrapped up soon, with the high-tech machines finding a home in Asian countries such as Japan and China by the end of the year.

Neither Coca Cola nor Pepsi could be reached for comment.

TeleVend has also been attracting attention from investment bankers. A spokesperson said that Goldman Sachs has just taken an equity stake in the company.

Thinking beyond the cola box
Eventually, TeleVend hopes to see the technology used in things as mundane as parking meters. How? People could bill meter time over their cell phone, and when the time is almost up, the meter could "call" the appropriate phone and ask if more time should be added.

The system is convenient for parking meter attendants, too: The system could call and tell which space has run out of time and is in need of ticketing.

Trivnet has made available similar technology that allows users to purchase items over the Internet via the PC, with the purchase cost added to their ISP bill instead of a credit card. Trivnet touts this as being better than a credit-card payment going over the Internet, but merchants need to sign on with Trivnet to permit this.

Although the focus is on using the service from PCs, conceivably the system could extend to any device with Internet access, including next-generation wireless handhelds and Internet-enabled cell phones.

"A lot of this activity comes out of fact that there are no smart cards in the U.S.," said Rob Sterling, digital commerce analyst with Jupiter Communications. (See related story.)

With no separate vehicle to deploy electronic payment systems on, "the next logical step is to put it on a small device, Sterling said. There are already quite a few devices in the form of pagers, PDAs, and cell phones, so there's no reason why payment systems shouldn't look to expand to existing devices," he said.

How soon will all of these visions of easy electronic payment systems become widespread? No one can tell for sure, Sterling said.