Coles Group Ltd (ASX: COL) and Woolworths Group Ltd (ASX: WOW) are leveraging off a COVID induced behaviour.
Given people have been scanning QR codes to check-in at venues, why not take advantage of this and knock two birds off with one stone?
That’s right, Coles and Woolworths are offering QR codes as a way to pay as seen below.
Supermarket giants partner with banks
Commonwealth Bank (ASX: CBA) and National Australia Bank (ASX: NAB) are supporting a new QR payments platform developed by eftpos as reported in the Australian Financial Review.
You use your camera to scan the code and make a payment. According to eftpos, it provides greater security, faster payments and a richer customer experience for customers.
Once customers scan, businesses can notify them with deals as well as the status of an existing rewards program. For example, you’ll see your Woolworths reward points pop up when you pay. Talk about real-time levelling up!
Not only that but if you pay for public transport, you’ll be able to receive coffee deals from nearby cafes.
Customers will be able to use buy-now-pay-later methods, providing flexibility on the spot.
Great for customers but how about retailers?
Retailers like this payment method because it integrates with their reward systems, enabling them to improve the marketing of offers to customers.
A Coles general manager of financial services noted eQR would, “improve the customer experience when making a payment in our stores and linking this to other functions such as loyalty“.
CBA and NAB will be enabling their terminals to provide a QR code to scan but retailers will also be able to slap a code anywhere without needing to use a terminal. This could provide reduced costs.
There is also another potential cost saving.
When you pay via your card linked to Apple Pay, the payment is automatically processed using either the Visa and Mastercard networks (international). If a dual network card is linked to eQR, the default network will be eftpos (domestic).
Small businesses tend to face higher fees on average when payments are processed on the international network. So, retailers could nudge customers to use eQR instead and reduce the amount of fees they need to pay.
What’s in it for the banks?
CBA has been airing its concerns over the significant amount of fees charged by Apple.
That’s right, the banks need to pay Apple to enable its customers to use ‘tap and go’.
CBA and NAB want to get around this by supporting eQR via their respective banking apps where there is no charge to banks for using the new eftpos service.
The banks will also be able to gather data through the banking apps, which could help them drive customer usage and engagement.
My thoughts
I think this is a sound play given the supermarkets’ focus on improving the customer experience.
I often find businesses that move in line with customer behaviours do well.
So, it’s no surprise that other banks and retailers, including in the fast-food industry, are expected to jump on board.
If this results in cost efficiencies for Coles and Woolworths, there could be value in these investments.
In saying this, I would first understand what is priced in at their current share prices.
