Mobile Commerce

Making Kohl’s Pay, Pay

As 2016 is warming up for the last sprint down the stretch consumers have no shortage of “Fill-In-The-Blank” Pays vying for their love, affection and attention.  Apple Pay, Android Pay, Samsung Pay, Walmart Pay, Chase Pay — the list goes on, and we would be remiss if we didn’t note that those outside the box thinkers at PayPal also belong — even if they did put the “Pay” first.

Can you say mobile inflection point?  We knew you could.

And yesterday (Oct. 5) the mobile payments battle arena saw it latest gladiator enter the fray — and yes, it is a new “Pay” player — Kohl’s Pay, to be specific.  On first take, that might come as something of a surprise — Kohl’s has been an enthusiastic adopter of mobile payments products, Apple Pay most specifically, and was even the first department store chain to allow its branded store card to be tied into the mobile payments platform complete with access to Kohl’s rewards program.

But Kohl’s has a bigger vision in play as it rolls out its own twist on the mobile payments platform — and that vision sees payments of part of a larger framework of creating customer convenience:

“As an omnichannel retailer, we are committed to leveraging technology to enhance both in-store and digital experiences,” Kohl’s Chief Technology Officer Ratnakar Lavu told PYMNTS in an email interview shortly after the news was announced.

“This is about Kohl’s creating simple, easy experiences for our customers that make omnichannel shopping frictionless.”

So how do those “simple, easy and frictionless experiences work, who do they work for — and will they work in the big picture?

Well …

Similar In Some Ways 

There are many flavors of mobile payments these days — and the easiest point of reference for Kohl’s Pay is Walmart Pay, released earlier this year.  Both platforms embrace QR code scanning over the contactless NFC (or hybrid NFC) methods favored by Apple, Android and Samsung.

The goals are also essentially similar — Kohl’s Pay looks to live up to the challenge CEO Kevin Mansell laid down for the firm in an investor call in August — finding a way to tightly tie the firm’s loyalty and payments experiences around each other.

“Wrapping loyalty programs together allows us to move customers up through Yes2You and credit card combos that will lead to higher engagement and higher sales,” Mansell noted.

The Kohl’s Pay launch comes into the context of finding new ways of creating those tight loyalty/payments ties — and then finding ways to present them to customers as a desirable alternative to the past experiences.  Lavu noted that part of the challenge in becoming truly omnichannel is actually offering customers a unified experience — as opposed to one that forces them to muddle through a lot of friction and fragmentation.

“We want to make it very easy and frictionless, both on our digital properties like our app and our stores. You used to have to take out your loyalty card, your charge card, and your coupons. Now you just have to take out the app in one step.”

And the payments function itself is fairly straight forward — once the app is launched and Kohl’s Pay is chosen, the customer scans a QR code at the POS, uses savings (Kohl’s cash and other rewards), approves the transaction and goes on with the day.

All easy – if a bit familiar.  But Kohl’s Pay comes with one somewhat unique baked in feature as well — it quite literally is not for everyone.


The Branded Card Difference  

“Kohl’s Pay is an added benefit available for our Kohl’s Charge card holders as an in-store offering across our store network of more than 1,100 Kohl’s stores nationwide,” Lavu noted — pointing to perhaps the biggest limiting out-of -the box feature of Kohl’s Pay.

Unlike its other “…” Pay rivals, Kohl’s Pay is so far only for carriers of Kohl’s branded cards.

“Kohl’s Pay is unlike any other mobile payment solution because it integrates our private label card — Kohl’s Charge — and the savings that customers love and expect from Kohl’s including Kohl’s Cash, Yes2You Rewards and other savings offers,” Lavu further noted. “We are redefining convenience for our customers by taking the value and convenience that customers already love about Kohl’s and bringing it together in mobile.”

The limit is surprising given the drive among its rivals to have customers put any and all payments cards into their digital wallets — but the Kohl’s customer base is somewhat unique in this regard. There are 25 million active cardholders across the U.S. and Kohl’s cardholders are a very loyal group.

According to the retailer’s internal data, 60 percent of its in-store sales are done through its store cards — which means Kohl’s is introducing its payments platform to its not small group of high enthused power users who represent shoppers likely to be most interested in using Kohl’s Pay at the point-of-sale. It’s not a very broad push for a payments platform — but it is arguably a deep one.

And one that Kohl’s has a lot of faith in going forward.

“With Kohl’s Pay, we sought to remove friction, add value, redefine convenience and differentiate the in-store experience,” Kohl’s CTO told us when asked about what the firm’s hopes for their expanded payments push are.

“We believe Kohl’s Pay is really going to resonate with Kohl’s Charge holders because it brings together both value and convenience.”

What Lavu implied but didn’t directly state was the ability for Kohl’s, thru Kohl’s Pay, to not only own the customer experience via the app, but also the data that is generated when consumers interact within it. Most “Pay” buttons erect a data barrier between the customer and the merchant – one of the big tradeoffs that merchants must weigh when deciding to add one to the online checkout experience. Kohl’s is making its big bet on the fact that rather than changing its consumer behavior — it is bowing to it and giving them an app that will encourage them to spend more when they shop in their stores.

It will be interesting to watch. 2016 may have given us a lot of “Pay” options, but so far, none that have moved us any closer to the mobile payments tipping point. Kohl’s Pay has not only given us a new flavor of “Pay,” but a test case to see the consumer adoption of an app that gives them only one way to do it.





New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.

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