Dive Brief:

• Kroger has launched Kroger Pay, a mobile payment program that combines shoppers’ payment information with loyalty cards and promotions, including digital coupons and personalized offers. Available in the grocer’s app, the program generates a QR code that shoppers scan at traditional checkouts as well as self-checkout stations.
• Kroger has also introduced a new debit card under its Rewards card program that offers discounts on private label products, bonus fuel points and more. The card, along with the Kroger Rewards credit and prepaid debit cards, offers additional rewards when used through Kroger Pay.
• Kroger Pay and the new Kroger Rewards debit card are currently available to shoppers in the grocer’s Columbus, Ohio division. The Rewards debit card is also available at King Soopers and City Market stores in Colorado and will expand nationwide this spring. Kroger Pay will move into 10 additional markets this spring and go nationwide later this year.

Dive Insight:

Increasing loyalty and providing faster checkout solutions are top priorities for retailers right now — and mobile payment solutions can check both boxes. According to Juniper Research, an estimated 2.1 billion consumers globally use mobile wallets for payments or money transfers now, a 30% jump over the 1.6 billion who used mobile wallets in 2017. The firm estimates global contactless payments will hit $2 trillion by next year, representing 15% of all point-of-sale transactions.

This includes popular third-party payment programs like Apple Pay, Samsung Pay and PayPal, which more and more retailers are incorporating. Last month, Target began accepting Apple Pay, Samsung Pay and contactless cards from Visa and Mastercard at all 1,850 of its stores, while Hy-Vee announced it would accept Apple Pay at all of its stores.

With its Kroger Pay announcement, the grocer joins numerous other retailers that have launched their own self-branded payment apps, including Target, CVS and Walmart. Reports suggest these payment apps can spur higher sales and loyalty among consumers who use them. However, getting shoppers to adopt the technology has proven tricky. According to one recent study, Walmart customers who use mobile payments are twice as likely to choose Apple Pay over Walmart pay — but those that do use Walmart pay spend more on average.

Kroger will need to promote the payment option in stores and through its online shopping channels. Kroger Pay is currently available under the retailer’s mobile app, making it easy for shoppers to sign up and use it.

Kroger’s new Rewards debit card, meanwhile, adds another payment option to the branded card program the retailer launched in 2017. Store cards can enhance loyalty, provide data about those loyal customers' purchases and responses to marketing, and they're a stream of revenue in their own right.

But research indicates shoppers are growing increasingly wary of store-brand cards. Three quarters (74%) of Americans have had a store credit card — and nearly half (47%) of them regret it, according to research from CompareCards.com by LendingTree. The study looked into the store cards of 50 major U.S. retail chains. It found many store cards had great perks in the beginning, but brutal interest rates and strict terms down the line. Even if Kroger's cards have terms that are comparable to other major credit cards, the stigma of other store cards may slow their growth.