STOCK PURCHASE AGREEMENT

      This Stock Purchase Agreement is made this 9th day of January 2006, by and
between USA TECHNOLOGIES, INC., a Pennsylvania corporation ("USA" or "Company"),
and Rationalwave OnShore Equity Fund, L.P. ("Buyer").

                                   BACKGROUND
                                   ----------

      As more  fully set forth  herein,  Buyer has  purchased  from the  Company
4,000,000 shares of Common Stock of USA (the  "Securities")  for $.10 per share,
for an aggregate of $400,000.

                                    AGREEMENT
                                    ---------

      NOW  THEREFORE,  intending to be legally bound hereby,  the parties hereto
agree as follows:

      1.  SUBSCRIPTION.  Buyer hereby  purchases the Securities from the Company
and the Company hereby sells and issues the Securities to Buyer. In full payment
for the  Securities,  Buyer has  delivered to USA a check payable to USA or wire
transfer  of  immediately  available  funds in the amount of  $400,000.  USA has
delivered to Buyer a  certificate  representing  4,000,000  shares of USA Common
Stock duly registered in the name of Buyer.

      No later than January 12, 2006, USA shall at its cost and expense  prepare
and file and  thereafter  use its best efforts to have  declared  effective,  an
appropriate  Registration  Statement with the Securities and Exchange Commission
("SEC")  registering  all of the  Securities  for resale by the holder under the
Securities Act of 1933, as amended ("Act"). The registration  statement shall be
prepared as a "shelf"  registration  statement  under Rule 415,  and the Company
shall  use its  best  efforts  to have  the  registration  statement  maintained
effective  until the earlier of (i) one year from the date  hereof,  or (ii) the
date  that  all  of the  Securities  are  resold  pursuant  to the  registration
statement or otherwise.

      2.  VERIFICATION  OF  STATUS  AS  "ACCREDITED   INVESTOR".   Buyer  hereby
represents to USA that it qualifies as an "accredited  investor" as such term is
defined in Rule 501 promulgated  under the Act because Buyer is a corporation or
partnership not formed for the specific purpose of acquiring the Securities with
total assets in excess of $5,000,000.


<PAGE>

      3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby makes
the following representations and warranties to Buyer:

            (a) Issuance of Securities.  The issuance of the Securities has been
duly authorized by USA, and are validly issued, fully paid and non-assessable.

            (b)  Corporate  Organization.  The  Company  is a  corporation  duly
organized,  validly  existing  and  in  good  standing  under  the  laws  of the
Commonwealth of Pennsylvania,  with all requisite power, authority and licensing
to own,  operate and lease its properties and carry on its business as now being
conducted.

            (c) Authority. The execution and delivery of this Agreement, and the
consummation of the transactions  contemplated  hereby have been duly authorized
by the Board of Directors of the Company and no other  corporate  proceedings on
the part of the Company are  necessary to authorize  this  Agreement or to carry
out the transactions contemplated hereby.

      4.  REPRESENTATIONS BY BUYER. Buyer represents and warrants to the Company
as follows:

            (a) Buyer has received,  read and understands the provisions of each
      of the  following:  (i) the  Company's  Annual Report on Form 10-K for the
      fiscal year ended June 30, 2005; (ii) the Company's Current Report on Form
      8-K filed with the  Commission on September 28, 2005;  (iii) the Company's
      Quarterly  Report on Form 10-Q for the quarter  ended  September 30, 2005;
      (iv) the  Company's  Registration  Statement  on Form S-1  filed  with the
      Commission  on May 13, 2005 (File No.  333-124078);  (v) the risk  factors
      incorporated  by reference  herein in Section  4(i)  hereof;  and (vi) the
      definitive  proxy  statement of the Company filed with the SEC on November
      17, 2005. Buyer  understands that all of the foregoing  together with this
      Subscription   Agreement   shall  be  referred  to  herein  as   "Offering
      Materials".

            (b)  Buyer  has  relied  only  upon the  information  presented  and
      contained in the Offering Materials.  Buyer has had the opportunity to ask
      of the  person or  persons  acting on  behalf of the  Company  any and all
      relevant questions in connection with any aspect of the Company including,
      but not limited to, the Securities  offered by the Offering  Materials and
      has received  answers  which it considers to be  reasonably  responsive to
      such  questions.  Buyer has had the  opportunity to verify the accuracy of
      the information contained in the Offering Materials.


<PAGE>

            (c) Buyer  understands  that it is  subscribing  for the  Securities
      without being  furnished any  literature or prospectus in connection  with
      the offering of the Securities other than the Offering Materials, and that
      the offering of the  Securities  presented in the Offering  Materials will
      not have been  scrutinized  by the  securities  administrator  or  similar
      bureau, agency, or department of the state of his residence.

            (d)  Buyer  understands  (i)  that  the  Securities  have  not  been
      registered  under the Act or registered or qualified  under the securities
      laws of the state of  domicile  of Buyer;  (ii) that  except as  otherwise
      provided  herein,  Buyer  has no right to  require  such  registration  or
      qualification;  and (iii) that therefore Buyer must bear the economic risk
      of the investment for an indefinite  period of time because the Securities
      may not be sold unless so  registered  or qualified or unless an exemption
      from such registration and qualification is available.

      Although  the Company has agreed to use its best  efforts to register  for
      resale the Securities with the Securities and Exchange Commission,  and to
      use its best  efforts  to keep such  registration  statement  current  and
      effective, there can be no assurance that such efforts will be successful.
      In any such event, the Securities would not be registered for resale under
      the Act, and could only be sold by the holder in reliance upon  exemptions
      from registration under the Act.

            (e) Subject to being resold  pursuant to an  effective  registration
      statement,  the Securities are being purchased for Buyer's own account for
      investment  purposes only and not for the interest of any other person and
      are not being  purchased  with a view to or for the resale,  distribution,
      subdivision or fractionalization thereof. Although the Common Stock of USA
      is currently traded on the OTC Bulletin Board under the symbol USTT, Buyer
      also  understands  that there may not be any  established  public  trading
      market for the sale of the Securities.

            (f) Buyer recognizes that the purchase of the Securities  involves a
      high  degree of risk  including  those  special  risks set forth under the
      caption "Risk  Factors" and "Forward  Looking  Statements" in the Form S-1
      Registration Statement of the Company (File No. 333-124078) filed with the
      Securities  and  Exchange  Commission  on May 13,  2005,  all of which are
      incorporated herein by reference.


<PAGE>

            (g)  Subject  to the  registration  rights  set forth  above,  Buyer
      understands  that its right to transfer the Securities  will be restricted
      as  set  forth  on  the  stock  certificates.  Such  restrictions  include
      provisions  against  transfer  unless such transfer is not in violation of
      the  Act,  or  applicable  state   securities  laws  (including   investor
      suitability  standards).  Buyer is familiar with  Regulation M promulgated
      under the Act and agrees to comply with its obligations thereunder.

            (h)  All  information  which  Buyer  has  provided  to  the  Company
      including,  but  not  limited  to,  its  tax  identification  number,  its
      financial  position,  and  status  as  an  accredited  investor,  and  its
      knowledge of financial and business matters is true,  correct and complete
      as of the  date of  execution  of this  Stock  Purchase  Agreement.  Buyer
      understands   that  USA  will  rely  in  a   material   degree   upon  the
      representations contained herein.

            (i) Buyer  maintains  a  principal  place of business at the address
      shown on the signature  page of this Stock  Purchase  Agreement,  at which
      address Buyer has subscribed for the Shares.

            (j) Buyer  understands that legends may be placed on any certificate
      representing the Securities substantially to the following effect:

THE SHARES  REPRESENTED BY THIS  CERTIFICATE  HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED,  OR APPLICABLE STATE SECURITIES STATUTES AND
REGULATIONS.  SUCH SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD,
TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT  FOR SUCH SHARES  UNDER THE  SECURITIES  ACT OF 1933,  AS AMENDED,  OR
APPLICABLE STATE SECURITIES  STATUTES AND  REGULATIONS,  UNLESS,  IN THE OPINION
(WHICH  SHALL BE IN FORM  AND  SUBSTANCE  SATISFACTORY  TO THE  CORPORATION)  OF
COUNSEL SATISFACTORY TO THE CORPORATION, SUCH REGISTRATION IS NOT REQUIRED.

            (k)  The  execution  and  delivery  of  this   Agreement,   and  the
      consummation  of  the  transactions  contemplated  hereby  has  been  duly
      authorized by Buyer.


<PAGE>

      5. SURVIVAL OF  REPRESENTATIONS,  WARRANTIES,  COVENANTS,  AGREEMENTS  AND
REMEDIES. Except as specifically provided otherwise herein, all representations,
warranties,  covenants,  agreements  and remedies of the parties  hereto,  shall
survive the date hereof.

      6. ENTIRE AGREEMENT.  This Agreement  constitutes the entire understanding
and  agreement  between the  parties  hereto  with  respect to the  transactions
contemplated  herein,  supersedes  all  prior  and  contemporaneous  agreements,
understandings,  negotiations and discussions,  whether oral or written,  of the
parties, and there have been no warranties, representations or promises, written
or oral, made by any of the parties hereto except as herein  expressly set forth
herein.

      7. BINDING  AGREEMENT.  This Agreement  shall be binding upon and inure to
the benefit of the parties hereto, as well as their respective  heirs,  personal
representatives,  successors and assigns but no party may assign its obligations
hereunder.

      8.  PENNSYLVANIA  LAW  CONTROLS.  This  Agreement  shall be  construed  in
accordance  with  and  shall be  governed  by the  laws of the  Commonwealth  of
Pennsylvania without regard to its conflicts of law rules.

      IN WITNESS  WHEREOF,  the parties  hereto have executed and delivered this
Stock Purchase Agreement on the date first above written.

                                     BUYER:
                     RATIONALWAVE ONSHORE EQUITY FUND, L.P.


Witness: /s/ D.Schafer                       /s/ Mark Rosenblatt
         -----------------------------       -----------------------------------
                                             Print Name: Mark Rosenblatt
                                             Title:

                                             Address:

                                             Rationalwave Associates
                                             230 Park Rd., Suite 928
                                             NY, NY 10169

                                             Tax Identification Number:
                                             41-2077424


                                         USA TECHNOLOGIES, INC.

                                         By: /s/ George R. Jensen, Jr.
                                                 -------------------------------
                                                 George R. Jensen, Jr.,
                                                 Chief Executive Officer