Dairy Queen To Test Mobile-Payment-By-Check-In

Dairy Queen is planning to test a mobile-payment app that uses check-ins—rather than an onscreen bar code or a contactless NFC signal—to authenticate the customer, according to PaymentsSource.

Customers who have used Dairy Queen's mobile app to check in at a store "will simply say 'I want to make a mobile payment,' and the service rep will process the payment through the tablet," said Charlie Wiggs, a senior vice president at Mozido, which will develop, host and maintain the system for the 6,100-store chain. The payments platform will include location-targeted marketing, mobile promotions and loyalty programs. Mobile ordering is planned for a future version of the program.

Technology aside, Dairy Queen will crib from Starbucks' (NASDAQ:SBUX) highly successful payments model by using prepaid accounts for the purchases rather than directly processing credit or debit card transactions. That will cut interchange fees out of at least some payments, although most customers are still expected to use conventional payment cards to charge up the prepaid account. Dairy Queen will also effectively collect interest on the prepaid balances.

Dairy Queen plans to test the mobile payments app this year, with a wider rollout in 2014. The app will initially be available on iOS and Android smartphones.

How well check-in authentication will work is unclear, since a stolen phone would seem to be wide open for a thief to use. However, in that respect Dairy Queen may be the perfect test bed. After all, how many Blizzards can a thief make off with while paying by check in? The worst-case scenario for Dairy Queen would seem to be losing the wholesale value of some high-margin food.

Besides, additional limits or ID checks could easily be put in place for bigger-ticket purchases. One of the advantages of mobile checkout is to move customers through the line faster, but with a huge order that wouldn't be an issue, and there would be plenty of time to ask for more identification.

For more:
See this PaymentSource story

Related stories:
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Mobile Payment Apps Are Still Bad At Failing (But They're Getting Better)
Mobile Wallets Hit $500 Million In 2012, But That's Mostly Starbucks

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