Card Use for Fast, Small-Ticket Purchases Surging

Businesses in which cash has reigned supreme - small-ticket, high-volume businesses in which efficiency and convenience are essential - are discovering a new avenue to improved customer service and sales growth. It is the bank card acceptance option.

MasterCard International designed Quick Payment Service specifically for the operational and marketing needs of these businesses. With the introduction of QPS, MasterCard is anticipating a decade of more pragmatic consumers and spending patterns.

Since the beginning of 1990 - in advance of the recent recession - MasterCard has acted on the belief that a great opportunity for bank card growth and profitability for our members is found in new, largely untapped markets that provide cardholders with convenience and flexibility in everyday purchases.

Targeting a Huge Market

QPS is one of the drivers of this acceptance business strategy. Targeting such everyday retail businesses as fast food restaurants, parking facilities, and movie theaters, quick payment service is bringing unique bank card usage and acceptance programs into these three strategically important cash-and check-dominated markets that together represent market potential of more than $62 billion, based on 1990 sales.

Arby's and MasterCard are working together on one of the most extensive QPS programs to date. The success of this first corporate rollout of bank card acceptance in the fast food industry has been dramatic. Even before the introductory five-market rollout was completed at Arby's, bank card transactions had captured 3.3% of total sales at participating restaurants.

This is ahead of the 3% goal Arby's and MasterCard had established as a sustaining level, and well on the way to capturing a 2% incremental sales increase for the restaurants. Average bank card transactions are running up to 60% higher than the average $3.80 cash purchase.

With two months to go in the introductory period, one market - Salt Lake City - was ringing up 5% of sales on bank cards, with some stores reaching as much as 12.5%. Arby's is rapidly moving to implement its service in 22 U.S. markets, involving 250 company-owned restaurants and numerous franchises by the end of 1991.

In addition to Arby's, there are other quick-payment success stories in the fast food industry, where 1990 projected sales exceeded $46 billion. An established MasterCard program at 28 Burger King restaurants in Portland, Ore., consistently captured 3.8% of sales on bank cards. In this program, average bank card transactions have been nearly double average cash transactions.

Similar successes have been reported in numerous programs throughout the country. The list of fast food chains now accepting cards in selected locations reads like a who's who of the industry - Kentucky Fried Chicken, Wendy's, Hardee's, Roy Rogers, McDonald's, Jack-in-the-Box, Taco Bell, Popeye's, Little Caesar's Pizza, Dairy Queen, Nathan's, Pizza Hut, and others.

But the payment service is certainly not limited to fast food operations. It is now provided at numerous locations throughout the country in the $10 billion-a-year parking lot industry. One of the latest installations is with the Port Authority of New York and New Jersey, which recently implemented a program to accept bank cards at airport parking facilities at all three of its airports.

Serving an estimated annual volume of 10.2 million cars with about 150 card-payment locations, it is the largest bank card acceptance program ever initiated at airport parking facilities.

The program allows customers to pay parking fees even as they wait for luggage by providing prepayment ticket machines at baggage claim areas inside the terminals. Of course, they may also use their cards for payment at the parking lot exit booths.

The streamlined system at the airport parking lots includes such timesaving features as elimination of imprinting and signing sales slips, but still provides customers with receipts. Bank card transactions typically are faster than cash transactions.

In the Port Authority's quick-payment systems, the files contain only listings of lost, stolen, or delinquent cards. These files are updated daily. But since the system need only scroll through this shorter list - compared with a list of all card numbers - each transaction takes only seconds, instead of minutes.

Movie Opportunity Strong

By some estimates, bank cards' potential share of movie theater ticket and concession sales exceeds $500 million a year, a sizable portion of this $6 billion-per-year industry. Cards have already achieved up to 40% of weekend sales in some locations.

Movie theater chains currently providing quick-payment service in selected locations include Fox, Pacific, Century, and Quad; other large chains are expected to announce rollouts soon.

Some of the benefits to MasterCard members, merchants, or consumers include:

* Growth opportunity for bank cards in untapped markets.

* Fast transaction speeds.

* Convenience of cashless payment.

* Increased card utility for consumers.

* Less cash for merchants to track and handle.

* Stimulation of add-on purchases.

* Potential to attract new customers.

More than 3,000 fast food restaurants, in addition to numerous movie theaters and parking facilities, already accept MasterCard. That number is expected to multiply many times this decade.

PHOTO : FAST IMPROVEMENT: Arby's, testing acceptance of MasterCard, has found that sales quickly rose 2% and that the average purchase was higher with cards than with cash.

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