A Peek at Walt Disney World's Ambitious Payments Renovation

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When launching any new payments technology, you won't get very far by just wishing upon a star. To really come to life, the technology needs the full support of the merchant that has to accept it.

MagicBand, a system that Walt Disney Co. has been testing all year with a limited number of employees and Walt Disney World resort patrons, seems to be poised for success based on what looks like an extreme level of commitment to it — so far.

I did not get to try MagicBand on my recent vacation at Walt Disney World, since the wristband is available at only a subset of Disney-owned hotels, and the company does not publicize which ones they are. But I did get a chance to see the infrastructure built throughout the multiple Disney World parks and hotels to allow patrons to make payments with a Jedi-like wave of a hand.

The wristband is a colorful, waterproof and heat-resistant bracelet that stores a digital token representing the patron's linked credit card, hotel key, theme park ticket and Fastpass (a system that lets vacationers use a shorter line for rides by agreeing to show up at a specific time). The band communicates wirelessly with payment terminals, hotel doors and the scanners Disney installed at the entrances to its theme parks and at each ride. MagicBand is also meant to be used with Disney's smartphone app.

For the most part, the band performs the same functions as the wireless plastic "Key to the World" cards each patron receives when checking in to a Disney hotel — if I wanted to, I could simply duct tape my card to my wrist and get nearly the same experience as using a MagicBand (the only difference is the card does not double as a Fastpass ticket, whereas MagicBand does).

The overlap with Key to the World is a good thing, since it demonstrates Disney's willingness to build on an existing technology instead of trying to reinvent the wheel. In this way, Disney is following the same path as Starbucks did when it designed its successful mobile payments app.

Starbucks, which today handles 10% of U.S. transactions through its mobile app, built its mobile payments system on the existing plastic Starbucks Card. When it came time to expand the app beyond a handful of test stores, Starbucks relied on another existing system: Target's point of sale scanners, which are used by any Starbucks store that's built into a Target store.

The below video from the website MouseSteps demonstrates many of MagicBand's functions, including paying for a meal, on a trip to Disney's Epcot.

So far, this is what you'd expect of any new payments system, and it's a good sign that it seems to be ubiquitous throughout each park I visited, though of course this is largely because the infrastructure was already in place to support Disney's plastic cards.

But here's where it starts to go overboard:

Magic Band T-Shirts

And going overboard is a good thing.

At two hotels I visited over the course of my trip, a portion of the gift shop was devoted to customizing MagicBands with cases and charms ("MagicBand-Its") depicting Mickey Mouse, the Muppets, and Disney Channel characters such as Phineas and Ferb. And of course, whether or not you own a MagicBand, you can purchase a T-shirt to advertise your fondness of them.

Above each of these displays, which I spotted at the Contemporary and Art of Animation resorts, there was a video screen demonstrating the process of using the MagicBand.

This, in my mind, goes above and beyond what many merchants do to support a new payments system. It is probably why Disney has a chance of succeeding where other theme park operators, such as Hersheypark, threw in the towel.

Hershey's wristband payment system, called Easy Pay, shut down just as Disney began gearing up to test MagicBand. Easy Pay supported payments at more than 200 payment terminals and also provided access to lockers within Hersheypark, but Hershey described adoption as "very low."

There are a few factors unique to the Disney experience that might work to the MagicBand's favor.

One is the fact that although payments are an optional function of Key to the World and MagicBand, the products themselves are almost impossible to avoid. My Key to the World card was required to get into my hotel room or any of the theme parks.

I still have the option to use my own credit card or cash when buying food and souvenirs, but it's actually a lot harder to use a regular credit card than it is to use Disney's contactless card.

Disney's card readers are light and are not typically attached to the countertop, so in many cases swiping my bank-issued credit card actually caused the payment terminal to grip the card and move along with it. The contactless reader in the terminal does not read common formats like Visa PayWave or MasterCard PayPass, so if I preferred to make a contactless payment I had to use Disney's card or wristband.

I don't think Disney deliberately made it frustrating to use any other payment method. However, it's clear that Disney designed its point of sale around newer payments technology — and that's a really good thing for anyone who receives a MagicBand.

So will MagicBand succeed?

In my mind, the odds are stacked in its favor, but I felt the same way about regular contactless cards, and today many people who have contactless cards in their wallets don't even realize it.

Disney would not agree to an interview about MagicBand, so I don't know how the company measures its success. If Disney simply wants to replace its plastic card, it could do that any time it wants.

But will MagicBand get more people to stop using cash at the Disney World parks? Does Disney even care about payments, or is it more interested in getting MagicBand owners to use Fastpass to ease wait times at its rides? If so, even that much would be a victory — in the example of Starbucks, the company's earliest success was in getting customers to reload cards from its app rather than waste time at the register for the same purpose.

Or maybe Disney just wants to sell a few more T-shirts. 

Daniel Wolfe is editor in chief at PaymentsSource and a contributing edtior at American Banker.

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