More Laundries Scrub Cash For Card-Payment Systems

  Fumbling for quarters is a thing of the past at a growing number of do-it-yourself Laundromats as more laundries install card-payment systems.
  Based on recent surveys, the Downers Grove, Ill.-based Coin Laundry Association estimates that 4% of some 35,000 self-serve laundries across the United States offer some type of card-based payment option, up from 1% in 2003. "Use of card-payment systems in self-service laundromats is a natural progression in technology," says the association's president, Brian Wallace.
  Though still in the nascent stage, credit, debit and prepaid card technology is finding a niche in the self-service laundry business, long a stronghold of cash payments. Card-based laundries offer conveniences to owners and customers alike, as they enable easier payment collection, less need for cash, easier price changes and the ability to reach customers with loyalty programs.
  Card systems offer laundry owners advantages over cash, Wallace says, including reduction of cash handling and theft, and better tracking of data such as number of wash and dry cycles.
  They also allow laundry owners to change pricing by pennies instead of quarters to match fluctuating energy costs. And owners more easily can offer discounts with card-based systems to encourage more customers to use machines during less-busy days and times.
  John Hooper, founder of Salem Laundry Co. of Salem, Mass., lays claim to the first self-serve laundry to accept payment cards. In 1991, he installed a card-payment system in a Salem laundry that he owned, and two years later patented it as the Easy Card System.
  The system includes a wall-embedded cabinet that loads, dispenses and reloads magnetic stripe prepaid cards. Terminals on washers and dryers read and debit the cards.
  Laundry owners like the pricing flexibility cards offer, contends Jeff Hooper, John's son, who now owns Salem Laundry.
  "A lot of times store owners do not raise the price for drying clothes even when gas prices increase because it will hurt the consumer," Jeff Hooper says. "But with the card system, most of the customers don't realize the price increase using a card."
  Dexter Laundry, a Fairfield, Iowa-based commercial laundry-equipment company, purchased Easy Card in 1997 and now offers its washers and dryers preinstalled with Easy Card readers instead of coin slots.
  "This makes the Easy Card system more affordable but also ensures that their equipment is installed to factory specifications and better protects the card readers from the harsh and humid environment of the self-service laundry," says Kim Hewitt, Dexter marketing manager.
  Dexter also sells the readers for laundries to install on their existing equipment.
  Hewitt says laundry owners also can program the system to incorporate advertised specials such as discounts for use during slow periods.
  Matt O'Connor has owned Matt's Lake Effect Laundromat in Buffalo, N.Y., for more than a year. He paid $45,000 for his Easy Card system, including installation.
  His laundry now hosts 84 card readers on washers and dryers and two cabinets that dispense and load value to prepaid cards. He buys about 500 cards per month at about 40 cents each.
  PAYING FOR ITSELF
  The equipment is paying for itself in incremental increased revenue, O'Connor says. Although he will not disclose by how much, he says the number of wash and dry cycles has increased.
  The laundry charges $1 per prepaid card dispensed. The card dispenser only accepts cash, not credit or bank debit cards. But customers short on cash can draw funds from an ATM in the laundry that charges $2 per transaction.
  When customers opt to register their Easy Cards to their names, O'Connor also can replace the value on lost or stolen cards and can better track customer activity. He can see when cards are used for what activities. Including regular and large loads, occasional sandwiches and other snacks, customers can spend nearly $17 per visit.
  Registration also allows O'Connor to keep in touch with customers who otherwise would be anonymous. "We send out post cards, offer them free wash incentives and drycleaning, and wash-and-fold deals," he says.
  Easy Card faces a growing list of competitors.
  Addison, Ill.-based Card Concepts Inc.'s X-Changer includes a kiosk that accepts cash and credit and debit card payments for prepaid cards and reloads. Laundries use a variety of card processors and acquirers for card transactions, including Chase Paymentech LLC and Global Payment Systems.
  The X-Changer kiosk loads, dispenses and reloads value to mag-stripe cards. Readers on washers and dryers read and debit the cards for cycles purchased.
  Steve Marcionetti, product manager and co-owner of Card Concepts, says the company has sold card-payment systems to about 200 U.S. Laundromats. "It's still an infant product," he says.
  CUSTOMER GROWTH
  The company has increased the number of customers using its system about 10% to 15% per year since it began offering them in 2000, Marcionetti adds.
  "The biggest advantage is that store owners don't have to charge by the quarter. They can charge by the penny," Marcionetti says. Those penny increases can stay closely tied to the price of utilities such as natural gas and electricity, he explains.
  "People love it," says Theresa Lemmer, owner of Wheaton, Ill.-based Lemmer Laundry Services, which offers the X-Changer system at its Aurora, Ill., site. "They don't want to dig for quarters in their pants."
  She says spending on the system's stored-value cards averages $13.87 for wash and dry cycles and vending machine purchases.
  First Data processes the laundry's debit and credit card payments.
  Lemmer says the Card Concepts system lets her see the history of customers' card transactions, including which machines they used. "That's handy because people are always forgetting their laundry," she says. Card data can help reunite clothing with befuddled owners who later call for help.
  Employees use special cards to clock into and out of the system, and other cards enable cash collection or technician access to the X-Changer.
  The system is linked to a computer server that Lemmer can access from within the laundry or from her home computer. She also can reprogram prices through the network.
  Installing the Card Concepts system cost $68,000 at Lemmer's Aurora site. Three and a half years ago, Lemmer and her husband installed an ESD smart card system at their laundry in Wheaton, Ill. Installation cost $25,000 at the store, which is three times smaller than the Aurora site.
  Paul Hansen uses the Card Concepts system in all seven of his laundries on the Southwest Side of Chicago. He started using the card system four years ago and says the ability to remotely monitor and manage his laundry payment systems has enabled him to open more locations.
  Hansen paid $50,000 for each system and buys 6,000 to 10,000 mag-stripe cards per location per year, at about 60 cents per card.
  Profits have steadily increased every year because of the card systems, he says. Hansen now raises prices at his laundromat every 12 months to 18 months, instead of every three to four years, and saves money and time on cash handling.
  "Risk of theft is less because people don't see you out there collecting buckets of quarters," he adds.
  Two of the locations accept credit and signature-debit cards. The payments are processed by Newark, Calif.-based Payment Processing Inc.
  INITIAL GLITCHES
  Hansen says there were initial glitches in the system, such as slow performance from a database that was too small. But Hansen says the system was upgraded according to owners' and operators' needs. "I am very happy with the system now," he says.
  Marcionetti says laundry owners typically buy from 5,000 to 10,000 mag-stripe cards per year, which makes card cost an important consideration. While mag-stripe cards average 45 cents each, smart cards can cost four to five times more, he says.
  Card cost is one factor that led Lemmer to choose Card Concepts' mag-stripe system for her Aurora store instead of a newer version of the smart card-based system made by ESD Inc. of Fort, Washington, Pa., she still uses at her Wheaton site.
  ESD representatives declined to be interviewed for this article.
  Diane and T.J. Kardas generally have been happy with how the ESD smart card systems they began using four years ago have operated. They have installed them in all four of their laundries in the Chicago suburbs.
  ESD's Super Diamond Center machine transfers value from cash and credit and debit cards to smart cards it dispenses and reloads. It also provides receipts.
  The system logs customer transactions on each card, numbers of wash and dry cycles and when they occurred. The system, which cost the Kardases $30,000 to $40,000 per site to install, can be monitored on site or remotely.
  The Kardas' laundries provide incentives for customers to reuse their smart cards rather than buy new ones each visit. "We buy back our cards so people do not throw them away, and (we) recycle, reprogram and reuse the card," Diane Kardas says. She charges a $2 "deposit" per card, which customers can reclaim if and when they return cards.
  Kardas says she also likes the extra security of keeping cash confined to the card dispenser and the ease of reprogramming card chips to charge different prices. It allows her to normally charge 99 cents, or 79 cents per wash during slow weekdays and $2.29 per wash on busy weekends, for example.
  Yearly sales volume has increased by 35% at all four laundries since the card systems were added, according to Kardas. About 70% of the laundries' income is from cash, and 30% is from card transactions, she says. "The revenue on credit cards is increasing," Kardas adds.
  COST HURDLES
  Despite Kardas' overall satisfaction with how the ESD systems operate, she says that any future installations will not be ESD. The Kardases want to purchase smart cards from other manufacturers, but ESD insists they use only ESD smart cards with its laundry system.
  Damon Levy, owner of the Cyclone Laundry & Internet Cafe in Baton Rouge, La., uses an ESD card payment system, which cost him between $60,000 and $70,000 to buy and install.
  COST ANXIETY
  Levy says many owners are scared off by up-front payment-equipment costs and the potential for flawed systems implementation. "A lot of glitches can come with any new system," he says. "[Our] system is not perfect, but it's getting there."
  Indeed, the cost of payment card systems is a hurdle to many laundry owners, according to Craig Dakauskas, national sales manager of Speed Queen, a popular brand of commercial washers and dryers made by Ripon, Wis.-based Alliance Laundry Systems.
  Alliance offers Speed Queen washers and dryers built to work with its NetMaster network-control system. The system controls washers and dryers and integrates into the company's CardMate Plus card-payment system.
  CardMate Plus includes kiosks that dispense smart cards, to which customers can add value with cash or credit or debit cards.
  NetMaster also can send data from individual laundromats to remote locations. That allows owners and operators to set and change prices from a central location, track individual machines for numbers of cycles purchased by day and time, and analyze revenues per site.
  Dakauskas calls card-payment systems one of most significant changes to the laundry industry in the past decade. He expects them to proliferate despite some early hurdles.
  "We are increasingly a cashless society, and it's only logical that vended laundries will continue to follow that trend," he says.
  Gradually, more laundries are embracing card programs. And as the technology providers iron out wrinkles in their systems, adoption could pick up steam.
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