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Why are more fast food giants not investing in mobile payments?By
Fast food giants such as McDonald’s, Taco Bell and KFC are missing a big opportunity by not incorporating mobile payments into their marketing efforts. The technology not only helps drive in-store foot traffic, but offers consumers an easy way to pay for their meals.
To date, Burger King is the only quick-service restaurant so far that is piloting a mobile payments program. Fast food chains should invest in mobile payments to provide new and existing cusomters with a seamless experience where they can bypass the long lines to pay for their meals.
“The challenge with fast food chains is one of payment type,” said Drew Sievers, CEO of mFoundry, San Francisco. “Someone like Starbucks has a large prepaid payment program, so it’s easy to mobilize.
“Most fast food chains take only a couple tender types – cash, credit, or debit cards,” he said. “Mobilizing open-loop methods like credit and debit cards is far more challenging than mobilizing a closed-loop prepaid system because a simple 2D bar code won’t typically pass the security rigors of the payment networks.
“There are more short-term opportunities for mobile loyalty and marketing than there are for mobile payments for fast food chains.
Getting on board
Last year, Subway announced that it will let consumers pay for their meal by tapping a MasterCard PassPass-enabled device or card at the register.
The initiative was to take place in the first quarter of 2012, however, no advances have since been made.
Mobile payments are still emerging.
However, it is never too early to start testing.
NFC handsets are launching this year, with many more slated to debut next year.
“As more devices penetrate the market, there will be more opportunities for full-blown NFC-driven mobile payments,” Mr. Sievers said. “Don’t hold your breath though.
“It’s going to take a while,” he said.
On the right track
Last month, Burger King made a smart move when it launched a mobile payments pilot program that let consumers pay for their meals using their mobile device.
The fast food giant partnered with Firethorn Mobile Inc. on the mobile initiative.
The pilot is taking place in approximately 50 Burger King restaurants in Salt Lake City and surrounding metropolitan areas.
Via the BK Mobile Crown Card, consumers can pay for their purchases using an Android or iOS-based device by scanning a QR code placed on counters or drive-up windows of participating Burger King restaurants.
Burger King’s newest effort is proof that mobile payments are gaining momentum.
Although the technology is still new, it will make a big impact for both marketers and consumers.
“Mobile payments are growing quickly but are still fairly embryonic compared to non-mobile payments so I don’t think these quick service restaurants are missing out much,” said Simon Buckingham, CEO of Appitalism, New York.
“These restaurants will be looking for solutions that hook into their existing infrastructure so that the costs of deploying mobile payments don’t hurt their profit margins,” he said. “Apple’s new Passbook feature in iOS 6 will impact retailers in terms of coupons.
“More restaurants should look at the Starbucks loyalty card type apps. PayPal has a wiser range of mobile solutions than ever before.”
According to said Chip Fishburne, senior vice president of financial services at Firethorn Mobile, Atlanta, one of the reasons that many QSRs have delayed testing mobile payments has been significant hardware investment required at the POS.
“Another reason is that many have just begun evaluating or implementing a loyalty program,” he said. A loyalty program is a key component within a mobile payments framework.
“QSRs now have a greater incentive to drive consumers to use their stored value cards as opposed to debit or credit cards.”
Having a mobile app that provides a loyalty program that rewards consumers for using the stored value card can produce significant cost savings.
“We will continue to see more mobile payments pilots like the one Burger King just launched and national rollouts in the next 12-18 months across all segments of the retail industry,” Mr. Fishburne said.
“The key for retailers is to focus on improving consumer engagement through the use of smartphones,” he said. “Consumers want a mobile shopping experience that delivers speed, simplicity and security.”
Mobile payments are hard to implement, generally, because of all the point-of-sale integration that has to happen.
However, online mobile commerce is relatively easy in comparison and a commerce-enabled app bridges the gap between these two.
“An app that has online checkout can be an effective way for quick serve restaurants to tap into the power of mobile,” said Wilson Kerr, vice president of business development and sales at Unbound Commerce, Boston.
“Because the mobile functionality resides on the consumer’s device, consumers can return again and again and will likely begin to trust the system with their credit card information, after they see how it works,” he said.
“QSRs live and die by a core customer base of loyal patrons that favor their fast food restaurants over others. Because the product is universal across locations, this creates a perfect storm for mobile commerce. In most cases a mobile app should follow a mobile site.”
According to Mr. Kerr, mobile payments at point of sale for physical goods are going to take a long time to catch on.
However, online mobile commerce is on a rocket ship.
“Adding a mobile ordering mechanism, with online checkout, can add value for consumers by streamlining the time it takes to get a meal and negating the need to carry cash,” Mr. Kerr said.
“Recently a developer in our office went out for lunch and came back in about 5 minutes, with his lunch from 5 Guys Burgers and Fries,” he said. “I asked him about this.
“He used the iPhone app to order ‘his regular,’ pay for it, and get directions to the location. He then walked in and walked out with his food.”
Rimma Kats, associate editor on Mobile Commerce Daily, New York
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