Walgreens customers using Apple Pay no longer need to scan their rewards card to earn points on purchases, with the company becoming the first retailer to integrate its loyalty program directly into Apple's mobile payments system.
The launch of the new feature is a big step forward in Apple Pay's transition from a pure payments system into a broader e-commerce offering encompassing loyalty programs, coupons and more. Walgreens has over 8,000 locations and more than 85 million members in its Balance Rewards program, and was one of the first major retailers to start accepting Apple Pay last year.
When Apple Pay was first announced more than a year ago, some analysts noted that without loyalty or rewards cards, it wouldn't be able to attract the kind of consumers who are stores' biggest and most reliable customers. CurrentC, a competing mobile payment system developed by a consortium of retailers, includes features like special offers and loyalty programs, but has yet to roll out nationally.
Apple said in June that Kohls, Dunkin Donuts, Panera, and Wegman's would bring their rewards cards to Apple Pay, while JC Penney and Kohl's would have their branded credit cards integrated with the system. Kohl's is also member of the consortium behind CurrentC, marking yet another defection to Apple Pay.
The addition of loyalty cards to Apple Pay — making its functionality closer to what Apple calls the entire wallet — comes as big changes are hitting the checkout counter. The introduction of new payment terminals and microchipped debit and credit cards has caused some confusion, as people insist on swiping their magnetic strips instead of inserting their cards, chip first, into the terminal.
Jason Del Rey at Re/Code wrote in June: "One big hurdle is convincing shoppers that there is a big advantage to paying with their phone or watch, when swiping a card is in many cases just as easy." Maybe the confusion and delays around the new chip cards is Apple Pay's opportunity.
BuzzFeed News was invited to a Manhattan Walgreen's to see just how the new system works. We picked up a 6-pack of Five Hour Energy, which would normally cost $16.49. A Walgreen's employee took it to the checkout, and after it was scanned, he put his iPhone up to the terminal. First, the $2.50 in loyalty savings were applied, then a digital coupon for $3 knocked it down to $10.99.
A second phone scan paid off the remainder with the employee's Amex card. It wasn't quite "magical" or "delightful" or any other tech industry buzz word — the first time we can ran it through, the scanner didn't work — but it sure was remarkably simple and fast. And no one had to fish around for a coupon, enter in a phone number, or look at their phone to find the number of a friend who has a loyalty account.
The question is how many people will actually use it, and how often. In a survey by Trustev, only 21% of respondents who had an iPhone with Apple Pay have used they service, and 56% of people who have used it do so only once in a typical week. 84% of respondents said that paying with a credit card in-store was "easy" or "very easy."
Matthew Zeitlin is a business reporter for BuzzFeed News and is based in New York. Zeitlin reports on Wall Street and big banks.
Contact Matthew Zeitlin at email@example.com.
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