Cincinnati-based grocery giant The Kroger Co. has launched a proprietary mobile-payments service, Kroger Pay, and an accompanying Kroger Rewards debit card. Kroger Pay, available for iOS and Android mobile devices, is a quick-response code-based mobile-payment service, which also includes digital coupons and personalized offers.
Kroger Pay, like some other retailer-backed mobile-payments services, is deeply integrated with a loyalty program. In Kroger’s case, the loyalty program also is tied to a new debit card, dubbed “Rewards.” Consumers accrue loyalty points when using Kroger Pay and can receive additional points when the payment method is the Rewards debit card or a payment network-branded prepaid card that also carries a Kroger store brand.
Kroger Pay also works with other credit, debit, and prepaid cards. While Kroger Pay does not lock out branded payment cards, such as those from issuers of the four card brands, it offers incentives to use its own card.
Kroger Pay generates a one-time-use quick-response code in the app that sends payment information to the point-of-sale system via a scan.
Currently, Kroger Pay is available in Columbus, Ohio, with plans for nationwide expansion later this year.
To use Kroger Pay at the checkout, the user opens the app and selects Kroger Pay from the “More” menu. She then either enters a PIN or scans a biometric. The QR code is scanned followed by scans of items to purchase. At a self-checkout station, the consumer taps “Mobile Pay” on the POS system and follows the prompts.
Many merchants choose QR-code technology for their own mobile-payments services because it can be an easier integration into the checkout process, where consumers and employees are used to scanning, and it may enable some transactions to sidestep the payment networks.
For example, Target Corp.’s Wallet only works with Target’s debit card, credit card, or the Target Mastercard. The general-purpose mobile wallets, such as Apple Pay, Google Pay, and Samsung Pay, accept multiple payment types and work with multiple retailers, if near-field communication technology is activated on their POS terminals. NFC is a wireless technology that some retailers have eschewed, but, like Target, others have eventually adopted.
NFC also presents a better consumer experience, says Thad Peterson, senior analyst at Boston-based Aite Group.
For example, to use Kroger Pay, the consumer has to find and open the Kroger app, “find the QR code and present it,” Peterson tells Digital Transactions News. “There’s more friction in their solution than there is using Apple Pay.” Apple Pay only requires the consumer to hold the smart phone or smart watch near the contactless reader to complete a transaction.
The question for the consumer, then, becomes, is there enough incentive in the loyalty program to use the QR code-based service, despite the friction involved in making a purchase, Peterson says.