McDonald’s’ Exit from Speedpass May Be Only a Hiccup for RFID

Although the decision by fast-food king McDonald's Corp. to shut down its test of ExxonMobil Corp.'s Speedpass contactless payment product seems to be a setback for the technology, not all observers agree. Indeed, some are convinced transactions based on radio-frequency identification (RFID) still have a bright future at high-throughput locations–maybe even at McDonald's. The reason: Contactless technology, which allows consumers to transmit card-account data by radio signals rather than through a conventional card swipe, may offer the only promising way forward for merchants seeking an electronic payment technology that speeds throughput, which is crucial for fast-food and certain other retail categories. “Contactless has interesting benefits,” including speed and convenience, says Nick Holland, a researcher at Mercator Advisory Group. RFID tests so far have shown tender times that are faster than cash. American Express Co. said last fall that its ExpressPay RFID test in Phoenix, in which contactless chips are embedded in keyfobs, was running payments in 8.9 seconds, compared to 12.4 seconds for cash and 15.3 seconds for signature-based debit. Partly for this reason, some researchers expect more uptake by merchants and consumers. In the quick-service, movie, and movie- and videogame-rental segment, Celent Communications expects RFID to go from a zero share in 2002 to 8% of transactions in 2007, with cash falling from 95% to 84%. Non-RFID cards account for the balance. Even McDonald's may return to RFID in the future, some experts argue. Besides the 440-store Speedpass test in the Chicago area, the chain also participated in MasterCard International's PayPass pilot last year in Orlando, Fla. The company is winding down the Speedpass program between now and June 30, a spokesperson says, because the technology is incompatible with a newly announced initiative to double the number of restaurants accepting credit and debit cards to 6,000 by the end of the year. “The test ended due to our alignment with our national cashless initiative,” the spokesperson says. Still, she says, the company was satisfied with the technology, though she won't give transaction data. “We had Speedpass for three years, and to keep it three years we'd say we were pleased with the system,” she says. Neither McDonald's nor ExxonMobil will give further details, but Mercator's Holland argues the fast-food chain may simply be positioning itself to accept RFID products like PayPass and ExpressPay in the future, both of which operate on a different technical standard from the one Speedpass uses. “That would have ubiquity that Speedpass doesn't have,” he says. “They may be aligning themselves for a bigger play.” For its part, ExxonMobil says Speedpass will expand to 750 more Exxon and Mobil stations this year, some of which include mini-marts that will also use the technology. That's on top of 8,500 stations and 15 Stop & Shop supermarkets in Boston already accepting Speedpass.