The Rise of Retailer-Specific Mobile Payment Solutions

While retailers are still in the process of transitioning to EMV chip card readers, mobile payments continue to increase thanks to the roll-outs of Apple Pay, Android Pay, and Samsung Pay. However over the past few months a new trend in mobile payments has emerged: retailer specific payment solutions. So far this year chains such as Walmart and CVS have introduced their own “Pay” products and, as Sarah Perez at TechCrunch reports, Kohl’s is the latest store to jump on board. 

This week the department store unveiled Kohl’s Pay and announced that it was would be available to shoppers nationwide this week. However, in a major departure from other offerings, Kohl’s Pay only works with the chain’s private label credit cards, meaning non-Kohl’s cardholders will be unable to use the service at this time. For those who are cardholders, one of the biggest benefits that Kohl’s Pay offers is integration with their loyalty rewards program, allowing users to automatically redeem their rewards as part of the transaction. 

Kohl’s isn’t alone in thinking that loyalty reward integration will help boost their mobile payments solution above other generic options. In fact the model has more or less been proven by Starbucks, who has been a leader and early adopter in this area. The coffee giant says that nearly one out of every five of their transactions is completed using their mobile app, which is popular among frequent visitors known as Gold Card members. Similarly Walmart’s mobile app which now features Walmart Pay allows shoppers to automatically submit their receipts to the Savings Catcher — an automated search function that credits shoppers if a lower advertised price is found on items they purchased — which could also boost loyalty.

In many cases that loyalty aspect is what’s missing from other mobile payment options such as Apple Pay. Going back to Starbucks, last year the company announced that it would introduce Apple Pay to their stores but that their Gold Cards (which are required for earning rewards) could not be added to the service. Even brands like Walgreens, which allow their rewards cards to be used with Apple or Android Pay still require users to tap twice — once for their loyalty card and again for their payment. Sadly dilemmas like these only serve to complicate what should be made simpler. 

As we mentioned last week with news that Square was working to hasten chip card transactions, speed of service has also been a driving force when it comes to mobile payment adoption. In fact Walmart cited it as a major reason for their introduction of Walmart Pay while hinting that they were working to take the concept even further, including allowing customers to ring up their transactions with their phones. With that in mind there is is motivation for other retailers to create their own mobile solution as well, perhaps even in addition to accepting the universal ones.

For now the future of mobile payment is still fairly unclear. While it stands to reason that Apple Pay and other will continue to grow as more phones that support the technology join the market, perhaps the payments space will be more fragmented than originally thought. However, in turn, the acceptance of these retailer-specific payment options could serve to boost adoption for the universal solutions overall — especially if they add better loyalty integration options. Only time will tell but one thing is for sure: mobile payments aren’t going away anytime soon.


Jonathan Dyer

I'm a small town guy living in Los Angeles looking to make solid financial decisions. I write for a number of finance websites, including HuffingtonPost and Business2Community. I founded in 2015 to focus on personal finance and the emerging FinTech markets.

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