OmnyPay finds its showcase with Kohl's Pay
When OmnyPay first made itself known to the market in 2014, the company brought with it a white-label mobile app product retailers could use to build better direct relationships with their customers through loyalty.
While the platform contained a payment function as a means to the end of an in-store transaction, OnmyPay's true focus was on loyalty. But there was one problem: The company didn't have a client to showcase its capabilities.
However, that changed last month when Kohl's introduced a payments feature to its app that combined the retailer's private-label credit card with its Kohl's offers, Kohl's Cash and Yes2You Rewards. Kohl's Pay now offers a one-tap experience that many industry pundits believe is the ideal model for mobile payments, and it’s based on OmnyPay technology.
"We were always very strong proponents of focusing on the large retailers and being more than just payments," Ashok Narasimhan, co-founder and CEO of OmnyPay, told Mobile Payments Today at last month’s Money20/20 conference in Las Vegas. "It was designed to give them control of the complete experience. It was nice to talk about.
"With Kohl's as a customer, this makes it real. In the past, before we got the first customer, people always asked us what we can do."
This is no longer the case, especially as some industry experts have showered Kohl's Pay with high praise.
"I am willing to take things a step further and predict that Kohl's Pay will become the gold standard for successful retail mobile payments strategies," Tim Spenny, the vice president of financial services consulting at GfK Research, wrote in a blog post last month for Mobile Payments Today. "Here's why: Much like the most successful mobile payment program, from Starbucks, the success of Kohl's Pay boils down to one word: coupons. (Or, in Kohl's vernacular, Kohl's Cash powered by Yes2You.)"
Indeed, loyalty is at the center of every discussion about mobile payments as a way to increase consumer adoption. And very few besides Starbucks have done it well.
LevelUp and Sionic Mobile come to mind, and the new Samsung Pay rewards system is poised to boost that mobile wallet's use. But there isn't much else to point to at this time because providers have focused their attention on the payment itself, which isn't much different than paying with a plastic card (even with EMV’s issues).
"If you look at just payments by itself, you have to ask whether you’re giving any more convenience to the customer [with mobile payments]," Narasimhan said. "I'm not sure you are. Is it saving any time? I don't think it is. So, that's one of the reasons you haven't seen a big spike in use because there’s no immediate value to the customer."
Narasimhan's comments are not much different from others we've read and heard in the past about mobile payments and loyalty. But now at least OmnyPay has something to point to with Kohl's Pay. The company also came into the market with a strong payments background baked into its operations.
Mohammad Khan, who worked at Verifone for 15 years before starting the now-defunct Vivotech, co-founded OmnyPay with Narasimhan.
When Khan spoke to Mobile Payments Today earlier this year at the Shoptalk conference in Las Vegas, he explained why OmnyPay was focused on QR code-based mobile payments, despite his past experience with NFC.
Firstly, he said, NFC's capabilities are still somewhat restricted, especially with the iPhone. Apple does not allow third parties to access the secure element on its phones, a restriction that Australian banks are challenging right now with the country's competition committee. QR codes, on the other hand, are device agnostic.
Secondly, Starbucks' success with 2D barcodes as a mobile payment method proves that NFC is not the be all to end all for the industry.
Kohl's, however, is in a unique position now as a major retailer that accepts both NFC- and QR code-based mobile payments.
The company earlier this year became the first to combine Apple Pay with its private-label credit card and rewards program.
Kohl's isn't worried about confusing customers by offering two payments options.
"I’m convinced that as long as you give the customer a choice, the customer is smart enough to figure it out," Ratnakar Lavu, the executive vice president of digital technology at Kohl's Department Stores, told Mobile Payments Today at Money20/20.
Kohl's most loyal customers will probably have more affinity for Kohl's Pay than Apple Pay because the retailer's app offers greater flexibility by incorporating retailer-specific offers and Kohl's Cash. Apple Pay users must present these discounts separately to the cashier.
"Even though we have NFC in our ecosystem, you still see the customer adoption is still in its infancy," Lavu said. "It's going to take a little while. What we thought was that our customers already know how to scan things. That's why we went the route we did.
"Let's make it easy and simple for now and over time, if [NFC] adoption takes off and the ecosystem opens up, we can easily support that."
In the two weeks following the Oct. 5 launch of Kohl's Pay, week-over-week enrollment rose 70 percent and the number of Kohl's Pay transactions doubled. Ninety-nine percent of these users are Yes2You members. Kohl's did not offer specifics on the exact number of users or transactions.
And this was without much marketing, though that's changed since last month.
"The Kohl's charge card holder is a value and convenience-oriented customer. They will actually see the value and convenience first once we start marketing it," Lavu said. "[O]nce they see the marketing and what Kohl's Pay is, we think there will be broader adoption."
Whether that broader adoption puts Kohl's Pay on par with Starbucks is something the industry will be watching in the year ahead.
Will Hernandez / Will Hernandez has 14 years of experience ranging from newspapers to wire services and trade publications. Before becoming Editor of MobilePaymentsToday.com, he spent two years as the content manager for PaymentsJournal.com, a leading payments industry news aggregator and information hub published by Mercator Advisory Group. Will spent four years covering the payments industry as an associate editor for multiple publications in SourceMedia's Payments Group based in Chicago.