Chase Pay Lands On Kroger’s Grocery List

by Raymond Pucci 0

Check off Chase Pay on your grocery list when shopping and paying at Kroger’s in 2018. As the following article reports, Kroger will have Chase Pay as its first mobile payments partner starting next year.

The mobile payment wars are making their way to a grocery store near you. Kroger Co., the largest U.S. supermarket chain, will begin offering JPMorgan Chase & Co.’s Chase Pay mobile wallet in certain markets beginning next year, the two companies said Tuesday in a statement. The partnership will be Kroger’s first venture into mobile payments as the retailer seeks to bring its shopping experience into the digital age.

Mobile payments have been slow to take off in the U.S. compared with other parts of the world as some merchants have balked at the higher fees associated with the technology and consumers have shown little interest in embracing it. Only about 0.5 percent of customer transactions on Visa Inc.’s network involves tokenized technologies such as wearables, digital wallets and mobile phones, the world’s largest payments network said at a conference in October.

That’s prompted banks, card networks, retailers and technology companies to pour investment dollars into their own payment applications in the hopes of developing the winning combination that will drive consumer adoption. Apple Inc. recently debuted a person-to-person payments network in the hopes of increasing usage of its Apple Pay service, while JPMorgan acquired Merchant Customer Exchange LLC’s payment technology this year to expand its capabilities. “With groceries, it’s a really key category for us, not only because of the volumes of transactions there, but because of the frequency,” said Tom O’Brien, JPMorgan’s managing director of Chase Pay.

For Kroger, the partnership with Chase made sense because the lender’s mobile wallet uses the familiar barcode-like system that the supermarket already employs to scan grocery items and other products. That means Kroger was able to retain its existing infrastructure instead of having to set up a new system like those used to process near-field communication, or NFC, transactions, Chris Hjelm, the retailer’s chief information officer, said in a telephone interview.

Kroger’s has been a holdout from Apple Pay and Android Pay and the required NFC-enabled POS terminals. So this Chase Pay deal saves Kroger from big investments in checkout systems changes. Additionally, Kroger will find cost savings that Chase Pay offers merchants since it runs on its own Chase Net rails. Kroger will also benefit from the rich customer intelligence it will collect from Chase Pay transactions. In sum, a win-win for both Kroger and Chase.

Overview by Raymond Pucci, Associate Director, Research Services Advisory Service at Mercator Advisory Group

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