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The hunt for the killer smart payment card application may become more focused after Wednesday’s announcement that Burger King and Mondex USA will launch a pilot to test smart payment cards in the fast food industry. Thus far, U.S. consumer acceptance of smart payment cards has been anything but enthusiastic, however yesterday’s development could excite U.S. consumers. The Burger King/Mondex smart card will combine an electronic cash function and a loyalty program. Cardholders will earn points toward free food items by using a single, reloadable Mondex smart card featuring the Burger King logo. This is the first time in the U.S. that Mondex cards can be obtained and reloaded directly at a merchant’s store location. This is also the first time that Mondex USA is testing an on-chip loyalty program. The test is being conducted in four NY Long Island-area Burger King restaurants and will last approximately six months. Card-dispensing devices inside the Burger Kings will offer pre-loaded Burger King Mondex cards with $10 or $20 of Mondex value. Customers receive one loyalty point for every dollar spent. Points are stored on the chip automatically at the time of purchase. Loyalty points can be redeemed as follows: 10 points — free breakfast value meal; 15 points — free WHOPPER sandwich value meal; and 20 points — free value meal of the customer’s choice. De La Rue will provide the smart card POS terminals for the test. Gemplus will manufacture, personalize, and customize the Burger King Mondex cards being used. Giesecke & Devrient America Inc. will supply the smart card dispensing machines. Chase Manhattan Bank will process the Mondex transactions.

FULL STORY:
Burger King Corp. and Mondex USA kicked off a joint test Wednesday that allows Burger King restaurant customers to use Mondex electronic cash and earn loyalty points toward free food items — all using a single, reloadable Mondex smart card featuring the Burger King logo.

This is the first time in the United States that Mondex cards can be obtained and reloaded directly at a merchant’s store location. This is also the first time that Mondex USA is testing an on-chip loyalty program. The test is being conducted in four Long Island-area Burger King restaurants and will last approximately six months.

“Our focus is on delivering the best-tasting food to our customers, and now we are exploring ways to improve convenience to our customers as well as offer a reward for their loyalty to our brand,” said Marianela Aran, vice president, Brand Research and Development for Burger King Corp. “By offering Burger King-branded Mondex cards from within our restaurants in this test, we hope to learn how smart cards appeal to our customers.”

“We are thrilled to work with Burger King on this creative application of Mondex,” said Janet S. Crane, president and CEO of Mondex USA. “We hope to learn how the value proposition grows for both consumers and Burger King when we combine loyalty and cash on a single card and issue it directly from the restaurant. We think this new concept will deliver convenience to customers, and bring the card to the top of their wallets.”

The Burger King Mondex card is the size of a credit card and can fit easily into consumers’ wallets. Card-dispensing devices directly inside the restaurants allow Burger King customers to obtain Burger King Mondex cards loaded with $10 or $20 of Mondex value. Customers order their meals in the traditional fashion and pay using their Burger King Mondex cards. The customer confirms the payment and the amount is deducted from the card.

Value-loading devices within the restaurants allow cardholders to reload Mondex value using their ATM cards.

Customers receive one loyalty point for every dollar spent. Points are stored on the chip automatically at the time of purchase. Loyalty points can be redeemed as follows: 10 points — free breakfast value meal; 15 points — free WHOPPER sandwich value meal; and 20 points — free value meal of the customer’s choice. The loyalty points will be issued for purchases made during the test period and will be redeemable at the participating restaurants for approximately six months after the test.

Later this summer, the Burger King Mondex cards can be used at the drive-thru window at two of the participating test restaurants that are equipped with drive-thru service.

The Burger King test is the first joint project conducted by all owners of Mondex USA. The Chase Manhattan Bank will process the Mondex transactions on behalf of the other six owners of Mondex USA. Chase has also upgraded seven of its ATMs in the area to load Mondex value. The owners of Mondex USA, separately and as a group, plan to test other distinctive value propositions in 1998 that will motivate card use in the U.S. marketplace.

“Chase will leverage our technical experience in launching the New York City Mondex program to move the Burger King program forward on behalf of all the owners of Mondex USA,” said Ron Braco, senior vice president and electronic commerce executive of The Chase Manhattan Bank.

“We are delighted that De La Rue Card Systems has been chosen for this test,” said Guy Robb, director of Product Management for De La Rue. “Our unrivaled experience in payments and loyalty makes us an ideal partner where reliable, innovative services are demanded.”

De La Rue has provided the smart card POS terminals for the test. Gemplus manufactured, personalized, and customized the Burger King Mondex cards being used. Giesecke & Devrient America Inc. supplied the smart card dispensing machines located within each Burger King test restaurant. Headquartered in San Francisco, Mondex USA was formed in April 1997 and is owned by seven U.S. financial service organizations: The Chase Manhattan Bank, Citibank Universal Card Services, First Chicago NBD, MasterCard, Michigan National Bank, Morgan Stanley Dean Witter & Co. (NOVUS), and Wells Fargo. Mondex purchase transactions are “chip-to-chip” and do not require centralized clearing or settlement of purchases.

Burger King Corp. and its franchises operate more than 9,600 restaurants in all 50 states, 55 countries and in international territories around the world. In fiscal year 1997, Burger King had systemwide sales of $9.8 billion. Burger King is a subsidiary of Diageo, plc, one of the largest branded consumer products businesses.

To learn more, visit both companies’ web sites at http://www.burgerking.com and http://www.mondexusa.com.

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