Jack in the Box Forgoes Contactless Trial, Opts for Immediate Rollout

By Evan Schuman Print this article Print

The $2.5 billion Jack in the Box restaurant chain will immediately deploy contactless payments chainwide, making it one of the biggest RFID-card endorsements since 7-Eleven.

When the $2.5 billion Jack in the Box fast-food chain started looking at contactless payment this year, it became clear that a faster transaction time wouldn't be the only benefit to accepting RFID-enabled credit cards. Embracing the technology would also add to the 2,000-restaurant chain's "coolness" factor, an especially important point given that the demographic fast-food managers most want to cultivate is 18- to 34-year-old men.

But taking the next traditional step—limited trials in a handful of carefully watched locations—wasn't going to make a bold enough statement for the chain. So it opted instead to immediately roll out contactless payment to every one of its restaurants—for the 1,400 restaurants it owns and about 600 that are franchised—in 17 states.

This is likely the largest endorsement of contactless payments yet in the restaurant space. Last year's chainwide rollout of contactless payment by the $41 billion 7-Eleven convenience store chain was one of the largest contactless endorsements overall.

Such a move is expensive and challenging, but the nation's largest credit card associations—including MasterCard, Visa, American Express and Discover—needed a chain like Jack in the Box to go full throttle on contactless.

Consumers who don't start seeing a lot of contactless merchants are much less likely to be interested in using the contactless card. So the card companies all offered substantial "financial assistance" to pay for the extensive hardware needed, said Michael Verdesca, director of POS (point-of-sale) systems for Jack in the Box.

"The associations funded the majority of the hardware costs," Verdesca said. "We just decided that we wanted to take advantage of the incentives. It definitely is the direction that we want to go in."

The contactless installations began in mid-October and will be completed in all of the company-owned restaurants—and 95 percent of the franchised locations—by Dec. 31, he said.

The chain is paying for the portion of the hardware that the card associations will not pay for, but the franchisees are responsible to pay for their installation costs. Verdesca said the counter installations "are really easy" and simply plug into existing POS units, and the drive-through unit installations will likely cost "a couple of hundred bucks" because someone has to "drill a hole in the wall and run [cable] through to the building."

The reason about 5 percent of the franchised locations will not initially deploy contactless is because they are accepting debit-card payments and the two are currently not compatible. The rest of the Jack in the Box chain does not accept debit cards, mostly because the inputting of the PIN would slow down transactions too much, said Cason Lane, the chain's manager of corporate communications.

Read the full story on eWEEK.com: Jack in the Box Forgoes Contactless Trial, Opts for Immediate Rollout.

This article was originally published on 2006-11-13
Evan Schuman is the editor of CIOInsight.com's Retail industry center. He has covered retail technology issues since 1988 for Ziff-Davis, CMP Media, IDG, Penton, Lebhar-Friedman, VNU, BusinessWeek, Business 2.0 and United Press International, among others. He can be reached by e-mail at Evan.Schuman@ziffdavisenterprise.com.
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