Kroger Begins Accepting Apple Pay After Years of Holding Out

[dwaite]

The fees are a killer in a business where a 1% margin is considered good.

I assume you mean credit card processing fees? Because the merchant doesn't pay for Apple Pay, the bank does. It was sold to banks as something they could justify within their anti-fraud budget.

The stores who deactivated contactless did not do so to save money on Apple Pay specifically, they did so because they were afraid the convenience would make an even larger portion of their business card-driven, and that they would thus have more processing fees there.

But their respective mobile payment strategies all failed, and many of the companies pushed for self-checkout where cash is pure pain. Most of them have slowly realized that blocking credit card options is hurting themselves as much as their customers.

Except Wal-Mart. It's basically a religious crusade for them.

 

[dwaite]

Kroger is the only grocer in my area. So of course, the whole family has starved for years until we can cut Apple in on each food purchase transaction. The kids are only about 65% as tall as their classmates and we can count all of our ribs from 20 paces... but who needs basic nutrition if Apple can't have a bite of every dollar spent?

Kroger is not paying Apple a cent as part of this deal. The credit/debit card company is the one paying.

You've been fictitiously starving your family for years on false pretenses.

 

[dwaite]

With Kroger Pay, I can scan my CC and rewards number at the same time. How would this work with Apple pay?

Theoretically they could support Apple Wallet loyalty cards and you present both sure once. I've only ever seen CVS do the legwork there though, and I don't know if they kept it deployed.

Today you hit Alt ID and key in your phone #.

 

[dwaite]

Walmart may never come around

They would have to fail hard enough at their own mobile payment strategy to have executive management change.

but Home Depot and Lowes, they will, when you have smaller home improvements like ACE Hardware taking Apple Pay, they will have to do something!

Its not quite this, but more that they are afraid that contactless payments will drive an even higher percentage of their purchases to credit cards to convenience, and impact their margins.

But grocery stores in particular have been cutting employees and replacing them with customers in the form of self-checkout. The employee to take cash now costs more than the credit card fees, and their efforts to push for mobile payments have just not born the fruit they want.

Anyhow, congrats on a win for Apple Pay, even if it is a test bed, it will expand in time with Krogers. A win for consumers too, a loss for thieves! Contactless payment is the way to go!

Kroger brands like King Soopers have seemed to have rolled this out already. I don't know enough about how Kroger structures M&As to know the logistics of this sort of roll-out, but I imagine everyone is "approved" to take Apple Pay now.

 

[dwaite]

Right. Which means there must be a compelling business reason for not supporting it. But what is it? I haven't seen any articles in the WSJ or elsewhere that dig into this aspect. Anyone know?

Yep, posted to thread. Accepting credit cards cost money, and a bunch of companies decided they would rather force people into their own mobile payment solutions rather than make existing credit card use even more convenient/prevalent.

Some of this was the timing - the switch in the US to chips was especially ugly, with the networks basically saying that any merchant who still took magnetic was responsible for all fraud (in the form of not getting paid for those transactions).

 

[dwaite]

I ran into Scott, CEO at the time of HEB, he's retired now, but he told me they would never have Apple Pay, some BS about concerns over privacy. Sigh, I'm sure a lot of those same privacy concerns go with physical cards being used too, so doesn't add up. HEB doesn't want to pay the merchant fees, same for Walmart. If Apple gave it for free to Walmart they actually might get Walmart on board, but Walmart probably have their line drawn in the sand on this one.

Apple doesn't charge Wal-mart for it, Apple's cut comes out of the fraud budget for the card-issuing bank.

Walmart just hates credit cards, they see the value as being for consumers and not for them. They don't see any value for the cut they spend on those transactions, and would rather keep pushing customers to their own mobile solution.

They see it as an abusive relationship that they can't get away from.

 

[SactoGuy18]

Since I have the Walmart app on my iPhone 12, I should note the following: you do want to have Face ID enabled to get into the Walmart Pay section of the app. But it does works pretty quickly, since once the app "sees" the QR code generated by the point-of-sale terminal, it immediately starts processing based on the linked credit card to the app.

 

[Michael Scrip]

Since I have the Walmart app on my iPhone 12, I should note the following: you do want to have Face ID enabled to get into the Walmart Pay section of the app. But it does works pretty quickly, since once the app "sees" the QR code generated by the point-of-sale terminal, it immediately starts processing based on the linked credit card to the app.

What's the difference between using a card linked in the Walmart app and using a card linked in something like Apple Pay?

We always hear that stores don't want to pay card fees... but there's still a card behind all these methods, right?

Whether you're scanning a QR code or tapping an NFC device... those are just shortcuts to the same credit card.

🤔

 

[_Spinn_]

Well , they are merging with Albertsons who already uses Apple Pay.

The Kroger Co. - Investor Relations

www.krogeralbertsons.com

I didn’t realize that was actually allowed to go through.

 

[_Spinn_]

Both Home Depot and Lowe’s had Apple Pay and turned it off. This change would leave me with just the home improvement stores and Walmart.( + Sam’s as a Walmart brand )

I’m still mad at Home Depot about this.

 

[_Spinn_]

About time. Hopefully this goes nationwide with all their brands.

 

[Robert.Walter]

I assume you mean credit card processing fees? Because the merchant doesn't pay for Apple Pay, the bank does. It was sold to banks as something they could justify within their anti-fraud budget.

The stores who deactivated contactless did not do so to save money on Apple Pay specifically, they did so because they were afraid the convenience would make an even larger portion of their business card-driven, and that they would thus have more processing fees there.

But their respective mobile payment strategies all failed, and many of the companies pushed for self-checkout where cash is pure pain. Most of them have slowly realized that blocking credit card options is hurting themselves as much as their customers.

Except Wal-Mart. It's basically a religious crusade for them.

This is the best and an accurate take.

 

[Robert.Walter]

What's the difference between using a card linked in the Walmart app and using a card linked in something like Apple Pay?

We always hear that stores don't want to pay card fees... but there's still a card behind all these methods, right?

Whether you're scanning a QR code or tapping an NFC device... those are just shortcuts to the same credit card.

🤔

They probably negotiated a different fee structure for cards in Walmart app. Plus you are not anonymous when using Walmart app. That personal info has value to Walmart.

 

[Robert.Walter]

I didn’t realize that was actually allowed to go through.

Don’t think it’s passed DOJ yet.

 

[Robert.Walter]

How do yo

Most children once they get adequate nutrition tend to catch up to where they should be so hopefully this happens soon and everything should be fine

I just want to also state how weird it is from the perspective of someone in the UK…

I only use my Apple Watch to pay for things. It’s been literally years since I paid with a physical card. I was working in retail until a year ago and honestly, the only people using cards still were 50+, most would use their phones (iPhone or Android) and a few would use watches.

Same here in Switzerland. Bought an iPhone 6 on launch day and could use Apple Pay most places I shopped. Bought Apple Watch 0 launch day 2015 and by then more places took AP. By 2019 AP is taken near everywhere.

My mom and sis in USA bought 6 and AW0 on their launch days and it took forever for Costco, Kroger (they shop meijer instead who had AP) and gas stations (meijer also was a first mover on gas).

Only places here without AP are spray car wash and rare odd holdouts. I even could pay my annual swimming pass and helicopter rescue (REGA) subscriptions with AP.

In USA it’s better but Mom and sis still wait for near ubiquity I’ve enjoyed since 5 years (even with the CH banking cartel and some big merchants here unsuccessfully trying originally to stifle AP in favor of their TWINT system.)

 

[InTeCredo]

It’s wild to me that these stores deactivate a feature which they could easily support. Does that mean you can’t do tap to pay with your credit card at those stores either?! Not supporting tap to pay with credit card is like only offering cash. It would alienate so many potential customers here

It has to do with the anonymized transactions that Apple Pay offers. In other word, the stores can't glean off the information about you from the debit or credit cards. Remember CurrentC fiasco? The MCX consortium wanted to include the customer profile in the transactions so the stores can track your spending and print out yards of coupons, special offers, etc. accordingly.

 

[gsurf123]

Amazon Fresh has them all beat. Scan your palm or a QR code from the Amazon app on your phone when you go in. Put the stuff you want in your cart (or carry it) and then scan your palm or the QR code on your phone on the way out. You don’t have go through a checkout to get your stuff scanned to pay.
The QR is not quite as good as Apple Pay, but it is close. The palm beats every single method of payment and no time wasted in checkout with the scanning puts them a long way ahead of every other store.

 

[CarAnalogy]

With Kroger Pay, I can scan my CC and rewards number at the same time. How would this work with Apple pay?

I would agree that this is more convenient if the app weren’t so clunky and crashy.

 

[PinkyMacGodess]

Exactly.

Stores that don't accept contactless payments in 2023 are like stores that didn't accept credit cards in 2003.

It's ridiculous. Way past time. They need to get with the program.

Their decisions are bad and they should feel bad.

🤣

I'm sure they will hang their heads in shame as they shuffle off to their bedrooms contemplating being 'grounded'...

'You can lead a horse to water, but you can't make it drink'?

They don't care because, truth be told, the number of people using contactless payment systems is still so small. But who knows what the threshold would be for adoption at say, Krogers. Is it, let's be realistic: 60%? 70? 85? 87.482%?

As long as people carry cash, and will relent and use their cards, some stores would rather die than share even 3% of THEIR money to make it easier for their customers.

 

[HobeSoundDarryl]

Kroger is not paying Apple a cent as part of this deal. The credit/debit card company is the one paying.

You've been fictitiously starving your family for years on false pretenses.

"We" can write such stuff all we want but a simple search for topics like "What does Apple get out of Apple Pay?" will reveal very tangible truth$. Whether Apple is getting directly paid or indirectly paid by the processor or bank so that people like you can imply that Apple gets "not a cent" from <retailer> doesn't alter the truth.

If processor or if big bank, SOMEBODY pays Apple that fee. Does that processor or big bank just eat that cost? Do they just cut their own transactional revenue to make a generous donation to Apple? No, if someone else is paying Apple, that added cost gets passed on to us consumers. So we do- in fact- pay Apple MORE for the privilege of using Apple Pay.

Else, ponder this: why would smart, very successful retail operations like a Kroger (and Walmart, etc) want to make it difficult for consumers to pay for what they want to buy by not allowing methods as popular as Apple Pay? Why would they hold out as some have when- as you imply- it costs them "not a cent" more to offer that method of payment and a chunk of an Apple base "refuse to buy anywhere that doesn't accept Apple Pay." Why are select retailers trying 'roll their own' systems instead of just going with some that are already well proven to work just fine if the latter doesn't cost them anything more? The answers to all such questions will shine a light on whether using Apple Pay costs anything more or not.

While it may not add a line item fee to the customer's receipt, it does add to the stores expenses, which then motivates the store to charge more to cover those added costs. Thus, we DO pay more and that's how Apple makes all that added revenue from Apple Pay. Else, why does Apple bother with Apple Pay if there's no revenue in it for them? Why do we sometimes see stories in which Apple has "made a deal" for <some business> to now accept Apple Pay? Why is Apple paying staff to forge such deals if there is "not a cent" of revenue for Apple?

It doesn't take much logic at all (but a simple website search for those with damaged logic processors) to know the answer to all $uch question$.

 

[grjj]

... The fees are a killer in a business where a 1% margin is considered good. They tried to come up with their own system thru the HT app but it was a huge pain to use - simply dunking the card was easier.

Apple charges more in processing fees than the standard credit card does.

This is a huge, and incorrect myth. Apple and Apple pay charge the merchant no more than they do if the customer swipes their card. In other words, Apple doesn't charge the merchant anything. The merchant's processing company does, but that's been going on since credit cards were invented.
There is zero financial reason to not accept Apple Pay vs a swipes or chipped card.

 

[PinkyMacGodess]

Kroger is the only grocer in my area. So of course, the whole family has starved for years until we can cut Apple in on each food purchase transaction. The kids are only about 65% as tall as their classmates and we can count all of our ribs from 20 paces... but who needs basic nutrition if Apple can't have a bite of every dollar spent?

I know you are trying to be sarcastic, but this makes me think of 'food deserts', which are a real thing. People that can't get decent produce, veggies, meats, cheeses, and can't use their Apple Pay apps.

There are whole areas of the country where there IS only one 'grocer', a huge behemoth who runs rough shod over accepted nutritional standards and needs for a healthy life. It's sad, near tragic. All those people wanting to use their Apple Pay to buy 'real produce', and can't. Back to your normally scheduled inanity... 🤪

 

[PinkyMacGodess]

"We" can write such stuff all we want but a simple search for topics like "What does Apple get out of Apple Pay?" will reveal very tangible truth$. Whether Apple is getting directly paid or indirectly paid by the processor or bank so that people like you can imply that Apple gets "not a cent" from <retailer> doesn't alter the truth.

If processor or if big bank, SOMEBODY pays Apple that fee. Does that processor or big bank just eat that cost? Do they just cut their own transactional revenue to make a generous donation to Apple? No, if someone else is paying Apple, that added cost gets passed on to us consumers. So we do- in fact- pay Apple MORE for the privilege of using Apple Pay.

Else, ponder this: why would smart, very successful retail operations like a Kroger (and Walmart, etc) want to make it difficult for consumers to pay for what they want to buy by not allowing methods as popular as Apple Pay? Why would they hold out as some have when- as you imply- it costs them "not a cent" more to offer that method of payment and a chunk of an Apple base "refuse to buy anywhere that doesn't accept Apple Pay." Why are select retailers trying 'roll their own' systems instead of just going with some that are already well proven to work just fine if the latter doesn't cost them anything more? The answers to all such questions will shine a light on whether using Apple Pay costs anything more or not.

While it may not add a line item fee to the customer's receipt, it does add to the stores expenses, which then motivates the store to charge more to cover those added costs. Thus, we DO pay more and that's how Apple makes all that added revenue from Apple Pay. Else, why does Apple bother with Apple Pay if there no revenue in it for them? Why do we sometimes see stories in which Apple has "made a deal" for <some business> to now accept Apple Pay? Why is Apple paying staff to forge such deals if there is "not a cent" revenue for Apple?

It doesn't take much logic at all (but a simple website search for those with damaged logic processors) to know the answer to all $uch question$.

American Express...

The 'Don't leave home without it' folks...

As a kid I was always surprised that the card people aren't supposed to leave without wasn't accepted at, to me, 'most' stores.

So why was that? CRUSHING MERCHANT FEES!

Compared to all other cards, AMEX had the highest transaction fees, the amount of money AMEX 'skims' off the top of every transaction. They also had the highest merchant fees, the fee charged just to be able to accept the card people shouldn't leave home without. AMEX was being viewed as a 'rich person's card', and they were losing market share to Visa and MasterCard. AMEX created 'Blue', and entered the 'low rent' card market. And it took off... It was a great idea.

I still think their transaction fees are higher than most, and would assume that the merchant fee for Blue are the same because it's still an 'AMEX Card', but now more stores swallow those fees because Blue did become so popular. It and the traditional American Express card are accepted at far and away more establishments than ever before. (I remember my Blue card wasn't accepted at so many stores in the area, that I took to joking about it being 'a new way to save money' as Blue was the only card I had. So corporations *can* be led to cough up more of 'their' money, if it's in their interest to do so. I think part of the resistance to Apple Pay can also be termed 'ideological', and you can't fight that.

(And the launch is running REALLY late. Is Texas on Mountain time?)

 

[HobeSoundDarryl]

AMEX is a great example of the same concept. Discover still has a bit of this problem too.

However, there is more than one post in this thread implying that there is not a cent for Apple in Apple Pay... and we should all naturally know much better than that without having to look it up for any evidence. For anyone in doubt, a simple web search will reveal all.

And I don't think it is idealogical at all. I think it is simple dollars & cents. It costs more than accepting traditional mainstream plastic so some retailers don't want to absorb the added cost.

• Why does it cost more? Because Apple wants a cut.
• How does Apple get that cut? Presumably, the bank adds that "commission" on to the transaction fee.
• Are banks known for their generosity? No. So how do they (re)cover that added cost? Bill the retailer more in transactional fee.
• Do the retailers want to make less on each transaction? No. So how do they cover that added cost?
• Bill us consumers more.

And the buck stops there (or should I say departs there).

 

[sparkinstx]

Walmart one of the last holdouts

Yeah, they were one of the participants in "CurrentC", which was a non-starter:

Wikipedia: Merchant Customer Exchange