BURGER KING SMART CARDS COOKING WITH CUSTOMERS

MIAMI -- While a variety of supermarket retailers on Manhattan's Upper West Side still continue to test smart cards as a payment option, a fast food restaurant is motivating its customers to make purchases with electronic cash by rewarding them with frequent-shopper points for each purchase made with the card.Burger King Corp. here launched a six-month pilot test of a smart card loyalty program in

MIAMI -- While a variety of supermarket retailers on Manhattan's Upper West Side still continue to test smart cards as a payment option, a fast food restaurant is motivating its customers to make purchases with electronic cash by rewarding them with frequent-shopper points for each purchase made with the card.

Burger King Corp. here launched a six-month pilot test of a smart card loyalty program in four Nassau County, N.Y.-based units June 3.

The smart cards, which contain a microprocessor chip capable of storing cash values up to $200, allow customers to purchase meals and products. In addition, the chip embedded in the electronic cards instantly tracks and stores purchase data, so the fast food giant can reward customers with loyalty points based on the dollars spent with the card.

The smart cards can also be used at merchants participating in Manhattan's Upper West Side test program.

"We expect the test to prove customer interest in the technology, and simultaneously, it is a great way for us to monitor and reward customers for their loyalty," said Charles Nicolas, spokesperson for Burger King.

The cards, available through dispensers in all four participating stores, come in $10 or $20 denominations. As customers insert cash into the machines, the cards are released, and can be used instantly for food purchases at the participating locations.

"Customers can order menu items and meals up to the value on the card," Nicolas explained. The cashier presses a button on the point-of-sale verifying that the order will be a smart card payment, and the customer inserts the card into a card reader next to the register.

"The card reader displays the order total, and the customer approves the total by pressing a button on the reader," he explained. "Once the order is verified, that total is deducted from the card."

According to Nicolas, the cards can also be reloaded at modified automatic teller machines in the participating restaurants, as well as at three branches of Chase Manhattan Bank, N.Y., in the testing areas. Customers must reload the card through transfers from their ATM cards.

The pilot is a joint launch between Burger King and Mondex U.S.A., San Francisco, which is owned by seven U.S. financial service companies.

The twist that differentiates this smart card test from other recent pilots is that Burger King is also using its card to promote customer loyalty. "For every dollar we deduct from the smart card for meal items, customers receive one loyalty point which is stored on the card's memory," Nicolas said. "Even if an order comes to $5.50, we round up to the next dollar, and give customers that extra point."

Once 10 points are accumulated, customers can redeem them for a free breakfast value meal; 15 points earn a free Whopper value meal, and 20 points entitle customers to any of the restaurant's value meals for free.

While Burger King is expecting the electronic cards to increase customer traffic and loyalty, participation is varied. "We are seeing a lot of interest, and customer smart card transactions vary day to day," said Edward Almonte, assistant manager for the Roosevelt Field Mall, Garden City, location. For example, cashiers are processing approximately eight to 15 card transactions per shift, he said.

"I think the cards are attracting more people into the stores," he added. "We ask them to use the card, and as a reward they can receive free food. It is all business, but it is fun business."

Burger King and Mondex executives declined to comment on further expansion, but they will be monitoring results during and after the pilot test. "This is a learning process," said Janet Otsuki, spokesperson for Mondex.

"This is the first time we are involved with an 'on-chip' loyalty program, and we hope to learn about how electronic cash can be a convenience and rewards combination," she added. "It is definitely more exciting and valuable than just an electronic cash product."

Though card use is currently limited to these four Burger King units, they can also be used at merchants participating in Manhattan's Upper West Side pilot. "However, customers will not earn loyalty points for using the cards outside of our pilot," explained Nicolas.

New York's test began in October as a six-month pilot. Currently the test has 450 merchants participating, with 91,000 cards issued to residents of the Upper West Side of Manhattan, according to Otsuki.

At the test's launch, supermarket retailers gearing up to accept the smart cards included two Food Emporium stores, a division of A&P, Montvale, N.J.; two D'Agostino Supermarkets, based in Larchmont, N.Y.; five Gristedes and a Sloan's Supermarkets location, both units of the Red Apple Group here.

The test was launched to test the inter-operability of electronic cash cards provided by both MasterCard International, Purchase, N.Y., and Visa U.S.A., San Mateo, Calif., and issued by Chase Manhattan and Citibank, N.Y.

"The pilot is still successfully running on a test basis," said Mondex's Otsuki. "We want to add a bit more pizzazz to motivate customers to use the cards more, and hopefully we will see expansion of this pilot later this year."

Otsuki declined to give specific details on the expansion, but did say the test could include additional stores and services. "Nothing has been announced, though the test could still be contained geographically," she added.

Other venues that have tested smart cards include the 1996 Summer Olympic Games in Atlanta, and the electronic cards have also been used on a limited basis in controlled environments such as college campuses and theme parks.