Is Disney ready to build an empire of cashless payments?
Walt Disney Co. is among the many companies that have aggressively pushed the limits of technology to do away with the need for cash. Its biggest test is about to begin.
Disney on Feb. 12 will start testing a cashless environment at its Animal Kingdom Lodge. Lots of options remain: Credit cards, debit cards, Apple Pay, Samsung Pay, Google Pay and — of course — Disney's MagicBands, which function as wearable payment devices, hotel room keys, theme park admission tickets and fashion accessories.
Disney's not alone. Shake Shack in late 2017 opened a cashless location in New York; and Starbucks opened a cashless location in Seattle shortly thereafter. In every case, the testing is limited to a single location, though Disney's Animal Kingdom Lodge is perhaps the most sprawling.
The lodge is separate from the Animal Kingdom theme park, one of many resorts and theme Disney operates in Florida. As with many Disney hotels, Animal Kingdom Lodge guests have free bus access to the theme parks, meaning they never have to leave the Disney ecosystem for the duration of their stay.
Thus, it's clear that while cash is still accepted at the rest of Disney's properties, the company will be watching closely to see whether Animal Kingdom Lodge guests build habits that follow them throughout their vacation.
"Cash represents a larger problem for amusement parks than for many other merchant types," said Rick Oglesby, founder and president of AZ Payments Group. "The nature of the amusement park, having huge crowds, wild rides and many opportunities to get soaking wet, makes it undesirable to carry valuables of any type, including cash."
Disney did not return requests for comment. But a cashless property is not as radical a departure as it would be for a restaurant or a shopping mall. Disney has long designed its theme parks to exist as worlds unto themselves, issuing its own "currency" to use as money or as a souvenir.
Disney Dollars, existed for about 30 years before being retired two years ago. Disney Dollars laid the foundation for a contactless Key to the World card that eventually became the wearable MagicBands in use today. Disney also pursued alternative "non-miles" travel incentives when the market was still dominated almost entirely by frequent flier perks, and was an early adopter of OEM mobile payment systems.
All of this goes back to Walt Disney's original vision of E.P.C.O.T as a self-contained city that reorganized work, education, transportation and systems of commerce and ownership. The idea eventually inspired the E.P.C.O.T theme park in Florida, not far from Animal Kingdom Lodge.
"There are a few reasons that testing a cashless payment option in a campus environment like a Disney resort makes a lot of sense," said Sarah Grotta, director of the debit and alternative products advisory group at Mercator, noting Disney's experience with wearables.
Disney's cardless and cashless MagicBand has enough of a track record to make a "no cash" requirement seem less risky than it may be perceived in other industries.
"It also has the advantage of built up trust with its guests," Grotta said. "Outside the Magic Kingdom, consumers are concerned about new ways to pay because they don't know if it is safe or if it will work. Guests trust that their transactions inside the Disney parks will be safe, easy to use and if issues arise they will be resolved. Also, consider that Disney sees a fair amount of guests from Canada, Europe and Asia, where cash is often used less than in the U.S. I anticipate that will be a successful rollout for Disney."
Disney has a captive audience where consumers will be shopping within the park, and potentially in attached hotels, continuously for several hours to several days, Oglesby said. "Offering easy ways to pay while allowing consumers to leave their valuables behind simply makes sense in this environment. Similarly it makes sense for the airlines’ onboard shopping options. That doesn’t mean it makes sense in all environments."
Less bullish is Gareth Lodge, a senior analyst at Celent, who said a wide range of options will likely need to remain.
"I think it’s telling that they are supporting a very broad range of electronic payment types, rather than just one or a prepay-type device," Lodge said. "I think they probably found that there was a benefit to moving to cashless, but that restricting choice meant there was low take-up."