What is the profit effect of two-tier pricing on vending machines?

THE SITUATION: PepsiCo had recently incorporated two-tier pricing on some of their vending machines in the United States. Essentially, paying with cash over a card provided a small discount to their consumers. We wanted to see what the lasting result on revenue was and why certain machines resulted in more cash purchases.

THE INSIGHT: Consumers on road trips or driving in quiet areas typically paid with cash at rest stops due to loose change in the car.

THE APPROACH: I created a file which analyzed each vending machine in terms of transactions, timing, and location. From this, we were able to note that the two-tier pricing actually resulted in a significant increase in revenue.