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Walmart Jumps Into Mobile Pay Fray

By David Jones
Dec 11, 2015 7:00 AM PT

Walmart on Thursday introduced its own mobile payments solution to let customers make in-store purchases with an Android or iOS smartphone. The move will make it the only retailer to compete with third-party mobile payment systems.

Walmart Jumps Into Mobile Pay Fray

Walmart currently is rolling out the feature through its Walmart mobile app in select stores in the northwest Arkansas area. It will expand to stores across the country by the first half of 2016, according to company spokesperson Danit Marquardt.

"The goal of Walmart Pay is simple," she told the E-Commerce Times. "Improve the checkout experience at Walmart stores and expand mobile payment access for millions of Americans."

The company sees Walmart Pay as complementary to other third-party mobile pay apps, and it is evaluating several mobile wallets that may be integrated into the Walmart Pay ecosystem in the future, Marquardt said.

Walmart Pay is designed to work with any major credit, debit, prepaid or Walmart gift card. It will allow customers to automate several functions, such as picking up of merchandise ordered online, refilling prescriptions at Walmart pharmacies, or finding a store location to purchase a particular item.

Twenty-two million people currently use the Walmart app each month, the company said, and it ranks among the top three retail apps on Google Play and the iTunes App Store.

Walmart never has offered Apple Pay or Android Pay at its stores, Marquardt confirmed.

Keeping Customer Data, Transaction Fees

One of the key reasons Walmart would choose to go in this direction could be to develop direct relationships with its customers rather than allowing third parties like Apple and Google to operate as intermediaries, observed Charles King, principal analyst at Pund-IT.

"This is something large-scale retailers and other companies have done for years, as evidenced by branded credit cards and gift cards," he told the E-Commerce Times.

It's too early to determine how well Walmart will do, as mobile payments are a small percentage of overall retail purchases, King noted. They reached about US$3.5 billion in 2014, and have been growing at a slower pace than expected.

A customer can make a Walmart Pay transaction at any register in the store by opening the Walmart app, choosing Walmart Pay, activating the camera, and then scanning the code displayed at the register. The Walmart associate then scans and bags the items being purchased. The system sends an e-receipt directly to the app.

Walmart has no plans to offer special discounts exclusively to Walmart Pay users, Marquardt said.

One of Walmart's key goals likely is to reduce the fees it pays for third-party charge card transactions, suggested Kevin Krewell, principal analyst at Tirias Research.

"When you are the scale of Walmart, a few percentage [points] of the purchases adds up to a lot of money," he told the E-Commerce Times.

Walmart belongs to the MCX Consortium, which is promoting a mobile payment system called "CurrentC," Krewell noted. CurrentC aims to compete directly with Apple Pay, but it has been delayed until 2016.

CVS and Rite Aid, two pharmacy chains that are part of the MCX Consortium, turned off the Apple Pay system at their stores last fall.

Right after that decision, a team of antitrust lawyers at Schubert, Jonckheer & Kolbe threatened to go after the chains for possible antitrust violations.

Rite Aid this summer reversed course and announced it would accept Apple Pay, Google Wallet and Android Pay.

Merchant-Owned platform

CurrentC currently is undergoing beta tests in Columbus, Ohio, according to MCX, and Walmart is one of 40 merchant partners planning a national launch.

"Walmart continues to be a strong and supportive partner of MCX and CurrentC -- and our goals remain the same -- to offer customers choices and convenience at checkout," MCX said in a statement provided to the E-Commerce Times by spokesperson Jonathan Lowe.

It remains to be seen whether the millions of Walmart customers who don't have credit or debit cards -- or in some cases, checking accounts -- will embrace the mobile app.

"There's a certain percentage of their customers who don't have cards of any type -- they're essentially bankless people," RSR Research analyst Brian Kilcourse told the E-Commerce Times.

It is not yet clear if those customers will be able to load cash directly onto the mobile app.


David Jones is a freelance writer based in Essex County, New Jersey. He has written for Reuters, Bloomberg, Crain's New York Business and The New York Times.


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