Mondex USA and Burger King Corp. are set to launch their joint smart card test today east of New York City.
For the first time, a retailer will distribute Mondex cards and allow for reloading of value on their chips.
The cobranded cards will also be the first in the country combining Mondex electronic cash with a retailer's loyalty point system.
The test is scheduled to run six months at four locations in the Long Island suburbs of East Meadow, Garden City, and Westbury.
They are by design at some remove from the highest-profile U.S. smart card experiment on the Upper West Side of Manhattan. Chase Manhattan Bank and Citibank have issued about 70,000 Mondex and Visa Cash cards in that area, where fast-food restaurants are among hundreds of participating locations.
"This is a different twist on Mondex issuance," said Janet S. Crane, president of San Francisco-based Mondex USA, part of the MasterCard- controlled Mondex International organization. "This is the first time our card is being issued out of a retailer's location."
With the cards distributed through on-site machines and the processing bank-Chase-behind the scenes, "we are reaching consumers we wouldn't necessarily pick up in a normal bank card distribution," Ms. Crane said.
They might include teenagers, other students, people without bank accounts, and "anyone we might attract through other than normal banking channels," she said.
Later in the summer Mondex will be accepted at drive-through lanes of the two test outlets so equipped. The chain does half its sales through those windows.
Anticipation about this "different twist" has been building since Ms. Crane revealed the Mondex-Burger King connection in January. Only sketchy details were available until this week.
Terminals have been operating for two weeks at a store in the Roosevelt Field Mall-a "beta site" designed to ensure the public launch would be bug- free.
Ms. Crane said positive signs are already emerging. Employees within the mall who frequent Burger King responded well, the Burger King workers most of all.
"The employees tend to be the younger people" Mondex is targeting, she said. "Burger King employees clearly see this as a unique program. We often see enthusiasm at retailers, but not usually at the level we see at Burger King."
Ms. Crane said the innovative marketing strategy of the Miami-based chain, a unit of Diageo PLC of the United Kingdom, made it receptive to Mondex. Totting up one loyalty point for every $1 or fraction of $1 spent, the cards are expected to keep customers coming back. Ten points gets them a free breakfast meal, 15 points a Whopper meal, and 20 points any value meal.
"We hope to learn how smart cards appeal to our customers," said Marianela Aran, Burger King vice president for brand research and development. "We know we have the best food, and now we are exploring ways to improve convenience to our customers as well as offer a reward for loyalty to our brand."
"It's a good idea," said James Shanahan of Business Dynamics Consulting, Newark, Del. "The benefits are incremental sales, and the private-label card model is more applicable here than the interbank credit card model."
Given the fast-food industry's heavy emphasis on brand identity and advertising, "a new payment mechanism with sex appeal and a novelty factor seems to fit well," the consultant said. "The loyalty component is itself a selling point."
In another first, the Burger King experiment is being jointly funded by the seven owners of Mondex USA: Chase, Citibank Universal Card Services, First Chicago NBD, MasterCard, Michigan National Bank, Wells Fargo Bank, and the Novus unit of Morgan Stanley, Dean Witter & Co.
Chase is "leveraging our technical experience" from the New York City pilot, said senior vice president Ronald Braco. It upgraded seven automated tellers on Long Island to load Mondex value, with all the Mondex partners sharing development costs.
Gemplus is supplying the cards, De La Rue Card Services the POS terminals, and Giesecke & Devrient the in-store machines dispensing $10 and $20 cards.
