Decoupled Debit Completes Grocer’s Mobile Strategy

by Patricia Hewitt 0

Finishing what appears to be a multi-yearplan to move Safeway grocery and fuel stations into a full-featureddigital environment, the company recently announced the launch ofits mobile payment product, Fast Forward. Operating as a decoupleddebit product, the consumer initiates a payment using a ten-digitcardless access number (known as your phone number) and aPIN.

Safeway is no stranger to providing banking services. It onceoperated a private label bank in-store, has offered a private labeldebit card called Smartcheck to consumers since 2002, and ownsBlackhawk Network, the industry leader in prepaid gift carddistribution. This new strategy, however, is all about mobile andcompletes the digital services circle, which includes personalizedmobile couponing, online ordering, and at-home delivery as well asenhanced loyalty rewards. In this case, it doubles the rewardsconsumers receive using any other payment form, including thecompany’s own Club Card.

Here is the construct of the Fast Forward product according toinformation available on their website:

  • Transactions are limited to five per day, eight for anythree-day period.
  • Purchases can’t exceed $400 per day or $700 in any three-dayperiod.
  • Cash back is available up to $100 per day or $200 per three-dayperiod.
  • If a consumer reports a lost or stolen card or cardless number,they are not liable for more than $50.00 of any fraud otherwise theloss is capped at $500.
  • Returned funds transfer is subject to fees allowable by statelaw.

Complimenting their Just for You digital offers platform, whichaccording to company CEO Steve Burd will represent 45% of their sales from registered users in 2012,Fast Forward builds on this momentum to offer even more convenienceto consumers and value to the company. Processed as ultra-low costACH transactions, this direct transfer-based payment productcompetes directly against traditional debit cards and leavesfinancial institutions with the cost of an ACH transaction and notmuch else.

It’s too soon to know what the uptake for this payment type will be(the program is only available in Sacramento so far), but the waySafeway has gone about creating a mobile strategy bodes well forits success. Supermarket and fuel transactions are at the heart ofdebit card spend and discounts motivate consumers to choosespecific payment forms. This strategy offers a glimpse into thepotential impact on the market of the Merchant Consumer Exchange’sstrategy should that consortium move to an ACH-based debit productfor their mobile payment app. Safeway represents one of the largeststores of its kind in the United States and this kind of strategycould prove to be the precursor to how mobile will truly disruptthe traditional debit market if merchants are able to controlconsumers at the point of sale.

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