AmEx Converts Rewards Points Into Cash for Transactions at McDonald’s

American Express Co. is making it easier for its cardholders to use their points to buy a Big Mac sandwich at McDonald’s restaurants in the United States. The card issuer announced Tuesday that AmEx rewards points now can be used to pay for purchases at select McDonald’s locations with national availability at 14,000 McDonald’s locations by December.

To use points at a McDonald’s, the cardholder orders his food and swipes his AmEx card through the terminal’s card reader. The payment screen displays an option to use points as payment and the number of points necessary for the order. The consumer presses a green Yes button to use points, with an on-screen confirmation. Declining the points use charges the transaction to the card. At the drive-thru, AmEx cardholders use points via the AmEx app or online after paying for their meals.

There are no limits on the points a cardholder can use during a transaction, AmEx says. No codes or registration process is necessary to use points at McDonald’s, says Dave Wolf, AmEx vice president for global product and business development.

AmEx developed the technology for use at more than 70,000 point-of-sale terminals inside McDonald’s, based in Oak Brook, Ill.

McDonald’s is the not the first POS merchant where AmEx cardholders can pay with points. AmEx points can be used to pay for taxi rides in New York City and for rides made with Uber, the private car service.

“This is a great strategic move for American Express for several reasons,” Madeline K. Aufseeser, senior analyst at Boston-based consulting firm Aite Group LLC, tells Digital Transactions News. One is that it transforms what typically are cash transactions in a fast-food restaurant to an electronic one. This helps reduce cash handling expense for merchants, she says. Another reason is that it promotes card use among consumers.

Consumers want to be able to use their rewards points where they shop, Aufseeser says. They don’t have to worry about having enough cash on hand or the amount of available credit, she says. And consumers like being able to use points immediately, without waiting for a reconciliation cycle to complete, she says.

She forecasts that other loyalty programs will mimic AmEx. “This is just the tip of the iceberg,” she says.