Market Mad House

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

Grocery Wars

Will Kroger finally adopt Apple Pay?

America’s largest alone grocer, Kroger (NYSE: KR) is finally testing Apple Pay and Google Pay in its stores.

Kroger is testing Fear Field Communications (NFC) contactless payments at its QFC stores in the Seattle area, a press release reveals. Apple Pay and Google Pay rely on NFC, which sends a wireless signal to a cash register to make payments.

Kroger is one of many large US retailers that have resisted NFC, probably because of security concerns. However, Kroger started testing NFC including Google Pay and Apple at QFC stores in August, Retail Dive reports.

Apple is winning the Payment Wars

Kroger is also testing its own Kroger Pay NFC solution. Retail Dive speculates that Kroger is testing contactless payments because of the coronavirus pandemic. Kroger management could fear it could lose Apple zombies’ business. eMarketer estimates over 30 Million Americans used Apple Pay in October 2019.

Kroger (KR) is America’s largest standalone grocer with 2,757 stores in the United States in 1st Quarter 2020. Kroger, like Walmart (NYSE: WMT), was a notable NFC payment refusenik.

I think Kroger’s adoption of NFC indicates Apple (NASDAQ: AAPL) and Alphabet (NASDAQ: GOOGL) are winning America’s payment wars. I predict Kroger and Target’s (NYSE: TGT) adoption of NFC could force Walmart to accept NFC.

Epic Games Sues Apple and Alphabet

Fortnite owner Epic Games is suing Apple and Alphabet (NASDAQ: GOOG) over payments. In a lawsuit, Epic objects to Alphabet and Apple’s practice of taking a 30% cut of app makers’ profits, PaymentsSource reports.

App makers need to pay the 30% cut for access to Google Play and the App Store. Without access to Google Play and the App Store app makers lose access to Android and iOS users.

Alphabet’s Android is the world’s most popular wireless device operating system. Statcounter estimates 74.6% of the world’s mobile devices ran on Android and 24.82% ran on iOS in July 2020. I estimate 99.42% of the world’s mobile devices use iOS or Android, if Statcounter is accurate.

Hence, App creators have no business without Alphabet and iOS. Thus, Alphabet and Apple have a monopoly on apps and mobile operating systems.

Epic’s allegations will add fire to the anti-trust debate because they allege Alphabet and Apple operate an app and mobile operation system monopoly.

Banks Pay a Fortune to Participate in Apple Pay

Apple has figured out a way to make money from Swiss banks. Swiss banks pay 26.6₵ USD or 0.275 in Swiss Francs, each time they process an Apple Pay transaction, Fin News reports.

Hence Apple charges Apple Pay users a surcharge each time they spend their own money in Switzerland. Thus, Apple makes money from bank accounts while taking on none of the obligations of a bank.

However, banks will pay Apple’s fees because Apple appeals to high-income consumers whose business banks want.