Subway has announced that it will be releasing a mobile wallet later this year that will help the fast-food chain reach its consumers on a new level through payments and loyalty.

The fast-food chain is following in the footsteps of many others, including McDonald’s, Burger King and KFC, in terms of mobilizing its payments. The company’s choice to have Paydiant  power the initiative is unique within the quick-service restaurant industry.

“We’re unique in the mobile wallet space because we don’t have an app in the app store,” said Chris Gardner, cofounder of Paydiant, Wellesley, MA. “We provide the technology to let stores do it in their own app.

“[Subway] decided it’s important to have these capabilities within their own app, so it’s a great fit for us,” he said.

Subway declined to comment for this story.

Paydiant platform
The Paydiant platform allows banks and retailers to integrate a mobile wallet within their own branded app, meaning that Subway will be able to insert a feature into its own app that lets consumers pay.

According to a statement from Subway, Paydiant’s platform made the most sense for the franchise and will help the chain provide an innovative and exceptional experience for its customers.

Paydiant’s white-label wallet platform sets its apart from some of the big competitors in the space such as Isis and Google Wallet. Those offerings require a consumer to download a separate app as opposed to opening up a branded app from a retailer or bank.

There are a few other options out there for a retailer to integrate payments within its branded app. PayPal Express Checkout provides that opportunity.

Tabbedout also provided a similar option to T.G.I. Friday’s (see story).

One of the biggest advantages of using the white-label platform is that retailers and banks can maintain control over their consumers within their own branded space.

While retailers and banks can integrate the mobile wallet into their own app, Paydiant also offers the ability to accept any other Paydiant wallets from its participating banks and retailers. This can build a larger ecosystem and network for the mobile wallets.

Paydiant uses QR codes to power its mobile wallets. That means that retailers do not have to buy new hardware for their POS systems and can instead integrate the technology into existing systems.

It also means that all consumers who have camera capabilities on their phone can use the wallet.

NFC-enabled wallets, on the other hand, require stores to purchase new hardware as well as consumers to have NFC-enabled mobile devices, or at least cases.

With Paydiant, Subway will not only have the ability to power mobile payments, but it will also be able to integrate loyalty and offers into the system.

Paydiant recently announced that it partnered with grocery-store chain Harris Teeter to pilot a mobile payment platform for its customers (see story).

Discover’s Pulse also leveraged the Paydiant platform to improve payment efficiency for its customers (see story).

Mobile fast-food
By definition, fast-food restaurants are all about delivering food to consumers as fast as possible. Mobile is therefore an obvious channel for the industry.

“For Subway, as with any fast food restaurant, it’s about serving customers as quickly as possible, while still providing a great customer experience,” said Brian Stein, managing director at Pervasive Path, Cleveland, OH.

“Because Subway allows customers to build their own subs, there is already an elongated cycle time and mobile payments represents an opportunity to expedite the check-out process increases order throughout,” he said.

“Use of a mobile payment system also allows Subway to encourage customers to use payment methods of their choice, including those with lower transaction costs, or even better to encourage customers to utilize a stored value card.”

Subway is not the first fast-food chain to introduce mobile payments to its stores.

In 2012, Burger King piloted a mobile payment service with the help of Firethorn Mobile Inc. (see story).

KFC entered the mobile payments scene this past April and teamed up with Airtag to power the mobile app (see story).

McDonald’s recently began testing mobile payments with the Isis wallet, but seemed to have some difficulty with the actual carrying out of the system (see story).

When implemented correctly, mobile wallets provide great opportunity for fast-food restaurants, whether it be through the actual payment, loyalty or personalization.

“Order-ahead functionality seems to resonate well with consumers,” said Arkady Fridman, senior research analyst at Aite Group, LLC, Boston.  “As well, many consumers return to the fast-food restaurant regularly, so buy-five-get-one-free type offers that are digitized are more convenient than the traditional punch-card method.

“In general, Subway can now learn who their customers are, what they buy and how often they shop,” he said.

“Mobile payments for Subway are less about the payment as they are about solving the consumer anonymity problem and establishing a direct communication channel with their customer.”

Final Take
Rebecca Borison is editorial assistant on Mobile Commerce Daily, New York