A bagging system for a vending machine provides a bag loading device for loading the bag to a bag holder. The bag holder includes clamping arms for clamping opposed side edges of the bag to retain the bag in position for filling. The clamping arms are movable between a position wherein the top of the bag is generally stretched taut and a position wherein the top of the bag is slackened to thereby allow the top opening of the bag to open so that the product can be dispensed into the bag. The product may be associated with a data providing element for providing data relating to the product or a security code, or both, to the vending machine processor.