[Dave Birch] The Quick Serve Retail (QSR) segment represents more than $160 billion in spending, with more than 80 percent of transactions conducted in cash. Increasingly, U.S. customers are cards instead of cash when making these purchases. In the twelve months ending March 31, 2007, the number of Visa card transactions at quick service restaurants increased 31 percent. Debit card usage at quick service restaurants during the same period grew 32 percent over the previous year. I find myself getting annoyed when fast food places don’t take cards, and I’m not a particularly frequent visitor (despite appearances), because I can’t be bothered to go and get cash. Now, obviously, one particular thing that interests me about QSR is its role in the contactless roll-out, both because contactless seems to be a way to encourage QSR outlets to start taking cards and because the fact that they will take cards will encourage people (I imagine) to apply for contactless cards. In London, QSR might well be in the vanguard of the contactless revolution!

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Now it’s certainly true that convenience is a real driver for increased payment card usage in all sorts of ways. The U.S. consumers surveyed on this topic (one in five of whom use cards to pay for more than half their QSR purchases) cited the obvious benefits:

  • Payment cards allow them to track spending (84 percent).
  • Funds are always accessible with cards, so it’s not necessary to plan ahead to get cash (82 percent).
  • When using a payment card at a QSR, they can get exactly what they need because they’re not limited to the cash on hand (77 percent).

What was also interesting to me though was that they were also asked what the problems with cash were. Their answers:

  • Being stuck in a long line (62 percent).
  • Digging in their wallet or pocket for cash and coins (48 percent).
  • Dropping money on the ground (28 percent).
  • Having to scale back their order because they were short on cash (15 percent).

Moving on, they were asked what it would take to get them to use cards more, they said:

  • They had the opportunity to earn rewards or free meals (28 percent).
  • More locations accepted payment cards (27 percent).
  • They could get through lines faster (30 percent).
  • They could swipe their own card (27 percent).

The latter two points would seem to go to the heart of the contactless proposition and must be very encouraging to those in the field, but let’s not overlook (I’m sure Aneace wouldn’t let us anyway) the first point. A major pull for mobile phones in this space will be the fact that phones can manage rewards and loyalty programmes much more effectively than cards.

These opinions are my own (I think) and presented solely in my capacity as an interested member of the general public [posted with ecto]


  1. Thanks Dave for the mention 🙂
    Did you see the article that just appeared in The Retail Bulletin, titled “Don’t let the banks kill cash”? I will be writing about it tomorrow, and, as usual, will suggest how to address merchants’ reluctance to pay for electronic payments.

  2. As a “recovering” banker and card guy, I guess I see this a little differently. The increase in usage at QSRs is based on the no signature rule, which drives speed and acceptance. It’s not based on the contactless versus EMV versus mag stripe debate.
    What most people don’t seem to want to discuss is there seems to be NO difference to the average consumer between swiping a mag strip card, inserting an EMV chip card or waiving a contactless card. Here are the changes that consumers have and will notice:
    – Handing the card to the clerk to process. This has been the method since the mid-50’s.
    – Self service at POS, consumer facing card terminal with or without PIN pad. More and more merchants are going this way, and consumers like it.
    – Elimination of the card in favor of NFC. Then we’ll have a platform that enables many new services.

  3. I’m on a roll tonight.
    Agree contactless would make a huge difference at QSR.
    Without contactless, cash moves the queue much quicker than card payment. Today the starbucks queue moves quite nicely until someone pulls the dreaded debit card. Usually takes two plus card insert attempts plus repeated PIN attempts. Chip & PIN will never be fast in a QSR environment.
    Also do not buy the tracking argument. I for one do not want my online banking review littered by hundreds of tiny transactions – cannot see the wood from the trees.
    Most of the rest have validity but over hyped, but then it was a VISA commissioned marketing pitch, sorry survey….

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