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The validator accepts cash. It has a rubber treadmill that drags bills under optical scanners. Each optical scanner is a little camera that sends pictures to a computer. That computer is programmed to look for certain marks in these pictures. If it sees these marks, the validator knows if a bill is genuine money, and it knows how much it's worth.
Not everyone pays with bills. The coin mech takes care of that. Its job is to distinguish between different types of coins.
When you insert a coin, it rolls past a series of electromagnets (coils of wire with electricity running through them). These electromagnets create an electromagnetic energy field. Any metal object - like a coin - will disturb this field. Quarters, pennies, dimes, nickels and fake coins affect the field differently, because they are made up of different metals and vary in thickness. Depending on how the field changes, the coin mech knows what kind of coin you inserted. It sorts the good coins into different stacks and tells the computer how much money you've put in.
