Cashless at McDonald's? No Problem!

Running low on cash, but hungry? Thanks to McDonald's (NYSE: MCD  ) Value Menu, there's a good chance you can buy some kind of meal with just the loose change in your pocket. But soon you won't even need those coins. Mickey D's is joining its fast-food brethren in accepting credit cards at many of its locations.

For a long time now, the fast-food industry (referred to by those in it as the "quick-serve restaurant" business) has refused to accept payment in the form of plastic. There has been some logic to the decision, as accepting credit cards can add complexity to operations and credit card processing isn't free.

But there's logic behind the capitulation, too -- people spending plastic money often spend more than they would with cash. You might not want to part with one more greenback in order to top off your lunch with a hot fudge sundae, but if you're charging it... what the heck? (Why is this? Learn more about the fascinating field of behavioral economics.) At Wendy's (NYSE: WEN  ) , plastic purchases have run about 35% higher than cash purchases -- about $7 vs. $5. That's a big difference.

Another advantage is that plastic transactions can be faster -- especially if no signature on a bill is required, as is the case at some fast-food eateries.

Here's the lowdown on who's doing what, per a USA Today article:

  • McDonald's will let you pay with plastic at up to 8,000 of its 13,500 U.S.-based locations by the end of the year.
  • Wendy's already accepts credit cards at 90% of its locations, and that will rise to 95% by year-end. (Wendy's notes that 8% of its transactions now involve a credit or debit card.)
  • Burger King, privately held now after being spun off from Diageo (NYSE: DEO  ) , accepts plastic at all 600 of its company-owned locations and roughly half of its 7,700 franchises.
  • Yum! Brands (NYSE: YUM  ) unit Taco Bell expects to accept plastic at all of its locations by year-end.
  • Jack in the Box (NYSE: JBX  ) already accepts credit cards at about 90% of its locations.

What else can we expect? Well, look at the success of Starbucks' (Nasdaq: SBUX  ) own card. Executives at McDonald's sure have. Imagine a McDonald's card that you can buy, loaded with cash, ready to spend on many meals, and able to be reloaded. Such cards can boost bottom lines as they represent companies getting money up front, well before services are rendered. They're essentially mini-loans. In many cases, customers lose the cards or fail to use them, making the issuing companies smile even more broadly. These cards can be great for investors of a company, but not so great for its customers. (Rex Moore explained why these cards are bad for consumers.)

Learn more about this intriguing industry and its developments:

Longtime Fool contributor Selena Maranjian does not own shares of any companies mentioned in this article.


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