The quick-service restaurant industry is working up a hearty appetite for mobile payments as a way to make fast food sales happen even faster.
McDonalds, Burger King and Wendys each announced updates to their mobile payments projects in the last few weeks. Their apps are, in a sense, the modern equivalent of the drive-through windowa way to speed up food sales through convenience.
Those in quick service are understanding that they have to be in mobile and that it has to be about either customer service or loyalty or some other promotion or incentive, says Paydiant Inc. co-founder Chris Gardner. Payments is part of that, but it is probably the least visible part.
Paydiant handles mobile payments for Subway and will also provide technology to the mutli-retailer mobile wallet, Merchant Customer Exchange (MCX). Many of the companies involved with MCX are quick-service or convenience stores, including Dunkin Donuts, 7-Eleven and Wendys.
All of these restaurants will use mobile apps to support remote food ordering, mobile payments or mobile loyalty, Gardner says.
Mobile commerce has found its niche with fast-food restaurants because the industry is aggressively looking for ways to increase the speed and frequency of customer visits.
It is no accident that the gold standard for mobile wallets is still Starbucks, Gardner says. Lane speed is very important to them and they have a great loyalty program.
The Starbucks app is used for 14% of in-store payments at U.S. locations, Starbucks reports. The Seattle companys CEO, Howard Schultz, changed his job responsibilities in January to give himself more time to focus on expanding the companys mobile payment and loyalty technology.
Many quick-service restaurants find themselves challenged to reproduce the success Starbucks had, says Jon Squire, CEO of CardFree, a company that employs several of the people who helped develop the original Starbucks app. CardFrees clients include Taco Bell, Sonic and Checkers/Rallys.
Squire previously worked at CorFire, which developed an app for Starbucks rival Dunkin Donuts.
When Starbucks launched there were a lot of questions about whether other folks could control their own destiny as well, Squire says. A lot folks were saying if Dunkin can pull it off, we can too.
In most cases, a mobile payment or loyalty app takes six months to a year to develop, Squire says. A lot of people have been working behind the scenes and I think you will see a lot more news as we get into the summer.
But even though many fast-food restaurants are developing apps for customer loyalty and pre-ordering, many are missing the payments component, says Seamless chief marketing officer Anders Forssten.
Seamless, which enables mobile payments for McDonalds in several countries, provides its own transaction switch, making it independent from any card infrastructure. That structure enables merchants to accept mobile payments at a lower cost than they would when accepting card payments, Forssten says.
McDonalds is advanced in its use of digital communication and mobile app offerings, he says. They were one of our first customers in 2012 and left the pilot stage more than a year ago.
The integration of the Seamless mobile wallet with the McDonalds app was a natural step to further drive transactions through mobile devices and communicate with their guests, Forssten says.
Burger King last month introduced a payment and couponing app it plans to support in all of its more than 7,000 U.S. locations. Users will load funds onto a virtual BK card in the app.
Wendys says its ready to roll out its payment app in the coming months in all of its U.S. and Canadian stores, after a year of testing. Users load funds into a prepaid balance on the Wendys app, and make payments with a six-digit code.
More consumers than ever are using smartphones, and mobile payment gives them the convenience and restaurant service they want and expect, Wendys spokesman Bob Bertini says. Mobile innovation is just one component of Wendys continuing brand transformation.
The continued development of mobile apps in the fast-food arena also indicates that merchants want more control over their customer data, says CardFrees Squire.
Its not about technology. Its about data, Squire says. They want as much information as they can get on that customer, and thats what we are enabling.
Retailers behind the MCX merchant mobile wallet have long said that they formed the initiative to make sure merchants keep control of customer data, instead of handing it over to a bank or mobile phone network. Data is also a motivating factor for merchants who have not joined MCX.
Whether it is payments focused or commerce focused or order-ahead focused, it doesnt matter, Squire says. They just need to get the right functionality in place for customers in order to get that data.
Mobile apps provide a better fit for quick-service restaurants because the payment process is so straightforward, says analyst Richard Oglesby, president of the AZ Payments LLC consulting firm.