Case Interview Question #00475: The Republic of Poland is a country in Eastern Europe with a population of over 38 million people. Currently the tax code in Poland allows for Polish companies to pay their employees in tax-free food tickets. These food tickets comprise only a fraction of the total compensation employees receive, yet they have created a sizable food ticket industry in the country. Because all employees receive these tickets, almost all restaurants in Poland accept them as cash.
The current system works as follows. Employers contract with food ticket producers to produce the tickets and track the food ticket compensation of each employee. The ticket producers deliver these tickets to the employers who in turn enclose the food tickets with weekly or monthly paychecks. The employees then exchange these food tickets at restaurants for food. The tickets have “same as cash value” at restaurants.
PKO Bank Polski (WSE: PKO) is the largest food ticket issuer and producer in Poland. Recently, PKO Bank Polski is thinking of replacing these paper based food tickets with SmartCards. Under this system employees would be issued a single SmartCard that they could charge once a week at a Card Charger (like an ATM) and then swipe their cards at a Card Reader at participating restaurants.
What issues should PKO Bank Polski think about in regards to the decision to switch to SmartCards?
The key to this case (adopt a new technology) here is to weigh the costs of such a move with the benefits. The candidate should identify key issues like: