THIRD AMENDMENT TO EMPLOYMENT AND
                            NON-COMPETITION AGREEMENT

         This Third  Amendment  is made as of the 25th day of July 2003,  by and
between  STEPHEN  P.  HERBERT  ("Herbert"),   and  USA  TECHNOLOGIES,   INC.,  a
Pennsylvania corporation ("USA").

                                   Background

         USA  and  Herbert  entered  into  an  Employment  And   Non-Competition
Agreement  dated April 4, 1996, a First  Amendment  thereto dated as of February
22, 2000, and a Second Amendment thereto dated April 15, 2002 (collectively, the
"Agreement").  As more fully set forth herein,  the parties  desire to amend the
Agreement in certain respects.
                                                     Agreement
         NOW, THEREFORE, in consideration of the covenants set forth herein, and
intending to be legally bound hereby, the parties agree as follows:

         1. Amendments.

         A. Subparagraph (a) of Section 1. Employment of the Agreement is hereby
deleted and the  following new  subparagraph  (a) is hereby  substituted  in its
place:
                  (a) USA shall employ Herbert as President and Chief  Operating
                  Officer  commencing on the date hereof and continuing  through
                  June 30, 2005 (the  "Employment  Period")  and Herbert  hereby
                  accepts such  employment.  Unless  terminated  by either party
                  hereto  upon  at  least  60-days  notice  prior  to end of the
                  original  Employment  Period ending June 30, 2005, or prior to
                  the end of any one year  extension of the  Employment  Period,
                  the  Employment  Period  shall  not be  terminated  and  shall
                  automatically   continue   in  full   force  and   effect  for
                  consecutive one year periods.
<PAGE>

                  If during the Employment Period,  Herbert shall be required to
                  take  a  role  which  is  substantively  different  than  that
                  contemplated  by this  Agreement,  or if during the Employment
                  Period a USA  Transaction  (as  such  term is  defined  in the
                  Employment  Agreement of George R.  Jensen,  Jr.) shall occur,
                  then Herbert may upon thirty days prior notice to the Company,
                  terminate the  Employment  Period.  Upon such  termination  by
                  Herbert,  neither  party  shall  have any  further  duties  or
                  obligations  hereunder,   provided,  however,  that  Herbert's
                  obligations  under  Sections 5 and 6 hereof shall  survive any
                  such termination.

         2.  Modification.   Except  as  otherwise  specifically  set  forth  in
Paragraph  1, the  Agreement  shall not be amended or  modified  in any  respect
whatsoever and shall continue in full force and effect.

         3. Capitalized Terms. Except as specifically provided otherwise herein,
all  capitalized  terms used herein shall have the meanings  ascribed to them in
the Agreement.

         4. Effective  Time. The amendments to the Agreement made in Paragraph 1
hereof shall be effective from and after the date of the Agreement.

         IN  WITNESS  WHEREOF,  the  parties  hereto  have  executed  this Third
Amendment on the day and year first above written.


                                                  USA TECHNOLOGIES, INC.


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

                                                     /s/ Stephen P. Herbert
                                                     -------------------------
                                                     STEPHEN P. HERBERT