How Card Processing Works, and Why AI Machines Have Different Rates

Every cashless vending transaction includes a processing fee.

This fee is not set by VMFS. It is determined by:

• Payment processors
• Card networks, Visa, Mastercard, and others
• Technology used
• Risk category
• Transaction structure

Understanding processing fees protects your margin and prevents confusion.

1. The Two Parts of Every Processing Fee

Most vending payment processing follows this structure:

Percentage Fee

Typically 3% to 6% applied to the total transaction amount.

Per-Transaction Fee

Typically $0.10 to $0.25 as a flat charge per swipe or tap.

Example

Customer buys a $2.00 item.

Processing rate: 5% plus $0.15

• 5% of $2.00 = $0.10
• +$0.15 flat fee
• Total processing cost = $0.25

Net received: $1.75

This is why pricing must account for processing.

2. Why Small Transactions Feel Expensive

On small ticket items, the flat fee has bigger impact.

Example:

• $1.50 sale
• 5% = $0.075
• +$0.15
• Total fee = $0.225

Effective rate is approximately 15%.

Low-priced items carry higher effective percentage impact. Pricing discipline matters.

3. Why AI Machines Have Different Rates

AI-powered vending systems often operate differently from traditional card readers.

AI machines may:

• Use computer vision tracking
• Offer open-door shopping experiences
• Process basket-style transactions
• Operate under different merchant category codes
• Require enhanced fraud monitoring
• Include advanced software infrastructure

Because of this, AI machines may fall into higher-risk or higher-tech processing categories.

This can result in:

• Higher percentage rates
• Platform or technology fees
• Per-transaction plus platform subscription costs

AI systems are more advanced, but processing cost may be higher.

4. Typical AI Machine Fee Structure

Rates vary by provider, but AI systems may include:

• 4% to 8% transaction rate
• Per-transaction flat fee
• Monthly platform or software fee
• Hardware leasing fee in some cases

Always confirm full cost breakdown before deployment.

5. Blended Effective Rate, What Actually Matters

Instead of focusing only on percentage, calculate:

Total processing fees divided by total revenue.

Example:

• Monthly revenue: $2,000
• Total processing fees: $120
• Effective rate = 6%

This blended rate shows real impact on profit.

6. How Processing Impacts Net Margin

Example:

• Machine gross revenue: $1,200
• Processing fees: $72 at 6%
• Remaining revenue: $1,128

Then subtract:

• Product cost
• Location share
• Fuel and restocking expenses

Processing must be included in profit calculation.

7. Why AI Machines Can Still Be Profitable

Even with higher processing rates, AI machines may:

• Increase average ticket size
• Reduce theft
• Reduce vend failures
• Improve user experience
• Support higher product pricing

Higher revenue per transaction can offset higher processing cost.

8. Strategies to Protect Margin

Operators can:

• Avoid underpricing products
• Increase prices slightly to absorb fees
• Encourage multi-item purchases
• Optimize product mix
• Use data to monitor transaction patterns

A $0.25 price adjustment often offsets processing impact.

9. Cash vs Cashless Reality

In modern environments, 80% to 100% of transactions are cashless.

Cashless increases convenience, but introduces processing cost.

However, cash handling also includes:

• Counting time
• Theft risk
• Bank deposit trips

Processing fees replace those inefficiencies.

10. Important Clarifications

VMFS does not control:

• Card network interchange rates
• Processor fee schedules
• International banking regulations

Rates are set by financial institutions and payment providers.

VMFS can assist with compatible hardware and integration, but processing agreements are separate from machine purchase.

11. International Processing Considerations

International deployments may include:

• Different rate structures
• SIM or data connectivity cost
• Local bank integration requirements
• Currency conversion fees

Always verify local compatibility before deployment.

Final Thought

Processing fees are part of modern vending.

They are predictable. They are manageable. They must be calculated into pricing from day one.

AI machines may carry higher processing structures, but also offer higher revenue potential and advanced capabilities.

Smart pricing and monitoring protect profit.