Coffee Republic Brews Up RFID Loyalty Cards

The system can be utilized on existing NFC POS terminals used for MasterCard and Visa contactless cards, Withane says. For the pilot, however, the sQuid cards are employing separate terminals to better track the number of times they are used.

The third benefit for Coffee Republic, in addition to shorter wait times at the sales counter and increased consumer loyalty, is the ability the service provides the company to access its customers by demographic, or in general. For example, although all personal customer data resides on sQuid's database, the company can access anonymous demographic data, such as the ages or genders of customers at any particular location or time. It can also instruct sQuid to send, for instance, a thank-you message to all of its patrons via e-mail, offering them a free coffee or other promotion.

According to Smith, the sQuid system costs a merchant, at maximum, a 1.5 percent fee for each purchase. That's about the same price a merchant pays for a credit card transaction, Withane says.

"The food-and-beverage industry can't negotiate cheaper rates [for credit card transactions], as we do small volumes of low-ticket transactions," Withane says. The sQuid system, he indicates, still saves Coffee Republic money. "We must remember that they administer the payment system along with the loyalty system," he notes, "so it's a heavier workload for a similar remuneration."

What's more, Withane adds, sQuid has become more attractive as consumers are steering away from their credit cards due to economic problems. As an alternative to the card, shoppers feel they have greater control over expenditures since they come out of a prepaid account. The smart card also makes it possible for those who have gone beyond their credit card limit to pay for purchases.