Drive-Through Issues Slow PIN Debit Adoption at Burger King

Burger King Corp., the Miami-based fast-food giant, may be rolling out credit and signature-debit card acceptance chainwide, but don't look for its stores to accept PIN-based debit cards on a wide scale any time soon. Julian Gomez, director of operations, services, and programs for Burger King, says his chain is talking to processor First Data Corp. about a PIN debit test, but it has concerns about the time it takes for customers in a drive-through lane to enter PINs. Denver-based First Data owns the Star System electronic funds transfer network. “It's not a problem in the stores, but we're concerned it could really slow things down in the drive-through if the server has to hand over to the customer a PIN pad and then have the customer enter a PIN and hand the device back,” Gomez says. One way to speed up payment at the drive-through is to install self-service card swipe devices near the order board instead of having customers turn their cards over to a clerk when they pick up their food. That way, customers can swipe their cards after they place their order and the authorization would be completed by the time they got to the pick-up window. Burger King tested the device, and while Gomez says the technology worked, the chain is holding off on rolling out the systems. “We've found that accepting credit cards at the pick-up window today has not slowed things down enough to justify a rollout. We're looking, however, at how PIN debit might change that,” Gomez says. But not everyone is a big fan of placing the terminal at the order board. Paul Rasori, vice president of marketing at terminal maker VeriFone Inc., says these terminals certainly work well, but there are other logistical issues that need to be resolved. For example, customers often change their order by the time they get to the pick-up window or there is confusion about what was ordered. Most customers prefer having the clerk help them with the payment, he says. Burger King's experience is important because in many ways PIN debit could greatly accelerate the conversion of payments to electronic forms in quick-service chains. Despite all the talk about credit cards accounting for more and more payments in quick-service restaurants, the vast majority of fast-food card payments are made on signature debit cards. For example, Visa U.S.A. numbers show that 74% of its card payments at QSRs are on its check cards. At Burger King Corp., which accepts cards at 90% of its U.S. stores and recently extended card acceptance to Canada (Digital Transactions News, March 21), a little more than 60% of its card transactions are on signature debit. This consumer preference for debit over credit has typically been attributed to the fact that debit cards overall are more commonly used on small-ticket purchases. While the card associations can no longer force retailers that take credit cards to also take signature debit, the two products are still typically sold together. Still, PIN-based debit is usually an add-on and requires the additional expense and time associated with using a pad for personal identification numbers. Indeed, processor First Data estimates that only 1.5% of total payments made at QSRs are on PIN-debit cards, compared to 6.7% made on Visa and MasterCard (both signature debit and credit cards combined) and 1.6% made on AmEx and Discover cards. Some payments experts, however, believe that PIN debit will take off in the QSR market soon. Gregory Holmes, senior vice president, enterprise customer development for First Data, notes that Star is set to implement May 1 a new interchange rate for the low-ticket market that is likely to spur PIN debit acceptance in QSRs (Digital Transactions News, Feb. 24). “PIN debit does not slow down the transaction, and in many cases, it is still faster than cash. Restaurants that do not accept PIN debit may be turning away a significant portion of their customer base that wants to use these cards,” Holmes says.