Market Mad House

In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. Friedrich Nietzsche

Grocery Wars

Target is Accepting Google Pay

One of America’s largest retailers, Target is accepting Google Pay and Apple Pay in its stores. To explain, Alphabet (NASDAQ: GOOG) sent out an email confirming Target’s acceptance of Google Pay on 20 February 2019.

In addition, The Minneapolis/St. Paul Business Journal reports Target will soon accept Apple Pay and Samsung Pay besides Google Pay. Notably, Target will also accept contact-less credit cards from Discover, Visa, American Express, and MasterCard in its stores.

To clarify, you need no swipe or insertion to pay with a contact-less credit or debit card. Instead, the card contacts the register via a wireless signal.

Target Accepts Apple Pay Breaks Ranks with Big Retail

Target is breaking ranks with big retail by accepting Google Pay. Like Walmart (NYSE: WMT), Kroger (NYSE: KR), Home Depot (NYSE: HD), and several other giant US retailers Target was refusing to accept NFC payment solutions.

In detail, Near Field Communications (NFC) digital wallets like Apple Pay communicate with point-of-sale (POS) terminals via a wireless signal. The wireless signal gives the App like Google Pay direct access to the retailers’ payments network.

My suspicion is that retailers like Target and Walmart were afraid hackers could use NFC apps to gain access to their systems. However, such hacking has not occurred, which gives Target a strong incentive to accept NFC payments.

Tellingly, Walmart accepts quick read (QR) code apps that do not give digital wallets’ access to its payment system. In fact, Walmart even offers its own QR Code payment app Walmart Pay.

Target’s change is a huge win for Apple and Alphabet

Target’s about face on NFC payments is a huge win for Apple Inc. (NASDAQ: AAPL) and Alphabet (NASDAQ: GOOGL).

Importantly, Target operates 1,850 stores in the United States and is popular with younger, urban and suburban shoppers. However, Target is facing brutal competition from Amazon (NASDAQ: AMZN), Costco (NASDAQ: COST), Walmart, Kroger, Aldi, and other deep discounters.

In particular, Target is the most vulnerable of the big US retailers to Amazon. For instance, the average Target shopper is a 20 to 50-year-old middle-class professional who lives in a city or suburb. Unfortunately, those demographics fit the average Amazon Prime user.

In addition, aggressive brick and mortar deep discounters like Aldi, Walmart, Trader Joe’s, and the TJX Companies (NYSE: TJX) are making a big push for urban and suburban customers. Hence, Target needs every edge it can get to attract customers.

Target will make or break Apple Pay and Google Pay

Thus, if Target can attract lots of new customers by accepting NFC it will put pressure on Kroger and Walmart to adopt the technology. However, retail could dump NFC completely if Target gets hacked through Google Pay or Apple Pay.

Therefore, my prediction is that Walmart and Kroger will watch Target to see if NFC helps its business. If NFC increases Target’s sales, without a big hack, Walmart; America’s largest retailer, will accept Apple Pay and Google Pay.

Under these circumstances, Target could make or break both Apple Pay and Google Pay. In particular, a big Apple Pay hack could send Apple and Target’s stock prices tumbling and drive Tim Cook into retirement.