Wave a 'Magic Wand' to Buy Burgers And Gasoline

Jody Luihn, a Taco Bell/KFC franchise owner in Raleigh, North Carolina, says giving customers the ability to use a high-tech but low-cost "magic wand" to pay for their food will dramatically change not only his business but the entire retail industry.

The device is based on a technology known as radio frequency identification. Exxon Mobil, which in 1997 introduced a version of RFID called Speedpass to speed payments at the gas pump, is conducting a test with McDonald's to let customers pay for their burgers and fries with the wave of a hand.

Joe Giordano, vice president of marketing and business development for Speedpass at Exxon Mobil, says he expects to see the Speedpass brand extended to a wide range of retail establishments, including other fast food restaurants, video stores, and grocery chains. He says Exxon Mobil expects to have 30 million Speedpass users within five years.

Tricon Global Restaurants started testing an RFID system last month at one of Luihn's Taco Bell and KFC outlets. Dave Brewer, vice president of technology at Tricon, says RFID technology might eventually be used by more than 100 million people in the United States.

Brewer says he examined several wireless technologies and settled on RFID because it's simple. "It has transmission security, it serves the needs of our customers, and (it performs) a cashless transaction faster than our current credit card system," he says.

A typical RFID tag carries a unique customer ID number embedded in a computer chip. It's scanned by a reader, which is linked to a customer's credit or debit account.

Doubts Expressed

Mike Liard, an analyst at Venture Development Corporation, says RFID "definitely has a lot of potential." But he calls the Exxon Mobil and Tricon market projections "very, very aggressive."

Steve Halliday, vice president of technology at AIM, a trade association for the automatic identification and data capture industry, also doubts that consumer use of RFID will command the market scale suggested by Exxon Mobil and Tricon. But he says "return on investment can be as little as seven or eight months."

Luihn, president of Luihn Food Systems, says, "I have customers begging me for the tags." He says RFID will boost credit card sales in his stores, while speeding up the processing of transactions.

"An average credit card transaction takes about 30 seconds...while authorization with (RFID) takes five seconds," Luihn says.

McDonald's has been testing Exxon Mobil's Speedpass since April at nine Chicago-area restaurants. Clay Nicolsen, senior director of technology for the Great Lakes division of McDonald's, calls RFID "very simple and easy to use. ...It's much simpler to use than cell phones...and our customers like it. They find it very appealing."

Toll roads and bridges around the country have widely adopted RFID technology as a way to speed toll payments.