Digital Transactions Authoritative, insightful and timely information for payments professionals
By Kevin Woodward
@DTPaymentNews
Kohl’s Corp. joins the ranks of retailers with their own mobile-wallet services with the launch this week of Kohl’s Pay.
Menomonee Falls, Wis.-based Kohl’s said the barcode mobile-payment service exclusively uses the private-label Kohl’s Charge card as the payment mechanism in more than 1,100 Kohl’s stores.
To use Kohl’s Pay, a consumer saves her Kohl’s Charge information to the retailer’s app, which is available for iOS and Android devices. At checkout, she launches the app and selects Kohl’s Pay, which opens a Quick Response code reader. After the point-of-sale system generates a QR code, the consumer aims the reader at the code. The POS system then applies the payment and any offers or rewards. The consumer taps within the app to complete the transaction.
Kohl’s says it has more than 25 million active Kohl’s Charge cardholders and its apps have been downloaded more than 14 million times. The company was one of the first U.S. merchants to include its private-label card in Apple Inc.’s Apple Pay wallet.
Kohl’s Pay is akin to Wal-Mart Stores Inc.’s Walmart Pay. Both eschew a third-party wallet model in efforts to capture as much transaction data from their consumers as possible. There may be cost savings, too, in the case of Kohl’s Pay, which, unlike Walmart Pay, does not permit branded cards. A Kohl’s executive was unavailable for comment.
“The end game for Kohl’s is to move payments, loyalty, and rewards into a more tightly integrated environment,” Jordan McKee, Boston-based senior analyst for mobile payments at 451 Research, tells Digital Transactions News via email. “In doing so, it will have created a platform to deliver personalized and contextually relevant information and offers to its shoppers, affording it greater control over the customer experience.”
The Kohl’s Charge exclusivity is understandable, McKee says, because nearly two-thirds of the retailer’s transactions can be attributed to the payment optio. A First Annapolis Consulting study late last year found the Kohl’s private-label card accounted for 58% of the merchant’s sales, the biggest store-card share among major retailers offering a private-label option. “The private-label-only proposition ensures Kohl’s maintains low processing costs and more ownership over customer data,” he says. “Kohl’s also presumably sees its wallet as a tool that will be primarily utilized by its most loyal shoppers—those likely already in possession of its private-label card.”
This foundation of users may aid Kohl’s Pay adoption. “Kohl’s is the latest retailer jumping into the mobile-wallet fray, and unlike many of its peers, it has an impressive foundation to start from,” McKee says.
Such a high penetration of Kohl’s Charge users, coupled with the 14 million app downloads, will trigger adoption of Kohl’s Pay, predicts Richard Crone, principal at San Carlos, Calif.-based Crone Consulting LLC.
“They are trying to embed payments into the customer experience,” Crone says, “not make it a separate experience.” In effect, when a consumer uses the Kohl’s app the payment will be a byproduct of the experience, he says. “It’s not just about the payment, but improving the in-store experience.”
