CINCINNATI - The Kroger Co. announced a new partnership with JP Morgan Chase & Co. Tuesday to accept mobile-phone payments through the Chase Pay digital wallet in up to 600 stores by the end of next year.
Kroger hasn’t named the cities that will go first in the rollout. It will allow customers to pay for their groceries online or at the checkout counter by showing the cashier a QR code generated for each transaction.
“A unique feature of the QR code is that it’s fast,” said Kathy Hanna, director of enterprise payments and store support at Kroger. “It’s going to be easy to identify on your phone. We will know that QR code is related to Chase and from there we can create a unique offer of some sort to the customer.”
The deal is an extension of the Restock Kroger plan for restoring sales growth through a variety of initiatives, including new partnerships to rapidly expand home-delivery services and online purchasing. Kroger follows Walmart, Best Buy and Starbucks as major retailers aligning with Chase, which has 65 million customers and holds 18 percent of the nation’s credit card debt.
“This is a significant win for our customers who now will be able to save time and money using Chase Pay at one of the top retailers in the country,” Jennifer Roberts, head of digital products at Chase, said in a press release. “Kroger is one of the places our customers shop the most, and it’s great to deliver more value to both a key partner and our customers.”
Kroger plans to embed the Chase Pay option in its own app so it can be easily used with ClickList orders, whether they’re picked up at the store or delivered. It should also work seamlessly with Kroger’s Scan Bag Go technology and link to the Kroger app’s digital coupon systems.
“We like their technology,” Hanna said. “We like their partnership. Chase has similar principals as us, where they focus on the customer. They’ve been creating some new, enhanced products.”
Mobile payments accounted for $450 billion in global purchases in 2015 and is expected to exceed $1 trillion by 2019, according to Statistica.
Chase ranked 9th among U.S. mobile wallet rivals, with only 6 percent of online shoppers reporting that they’ve used the system, according to a May report by Bernstein Research.
PayPal is the market leader, with a 61 percent use rate, followed by Visa at 20 percent. Amazon, Apple Pay and Android Pay rounded out the top five, all above 10 percent.
Hanna said Kroger has tested many of those payment systems, which let a customer pay by waving their phone over a device that picks up their payment information with near field communication, or NFC technology.
“We offered NFC in a few of our markets some time ago and we had low adoption,” she said. “When you look at the QR codes, that’s really being led by Chase. It has the largest cardholder base and a customer base that’s actually using it.”
Hanna wouldn't provide financial details of its new deal with Chase, nor could she say whether Kroger will offer competing payment systems in the future.
In a Dec. 5 conference call with Wall Street analysts, Chase Chief Financial Officer Marianna Lake said mobile payments will continue to evolve through "multi-product relationships" involving banks, retailers and shared customers.
Chase Pay is "growing from a small base," she said. "We think it will be pretty transformational, but there are a lot of digital wallets and we want our customers to have a lot of choices. And so, we are in a lot of those wallets, providing our customers with those choices."