By adaptive - March 21st, 2016

Walmart delivered an early Christmas surprise in December with the launch of its alternative to Apple Pay: Walmart Pay. And as Hans Klis reports, Even though it employs the somewhat unreliable QR-code it just might become an industry standard for mobile payments.

Ever since Apple Pay’s launch in 2014 Walmart has kept the service at arm’s length. Together with other major US retailers it has been working in a consortium, the Merchant Customer Exchange (MCX) to develop an industry standard mobile payment system called CurrentC.
Partners in this group shunned Apple Pay for a long time in their stores, but last year cracks seemed to emerge in their resolve. MCX members like Best Buy and CVS started accepting Apple Pay – essentially undermining their own efforts developing CurrentC. Which, although it’s been in development since 2012, still hasn’t launched.
In December Walmart launched its very own mobile wallet: Walmart Pay. Although still being tested in a limited number of stores in Arkansas, it will be available for customers in the US later this year. This new functionality is embedded in the existing Walmart app, instantly creating a base of more than 22 million users. That’s well behind the 74 million new iPhones Apple sold just in the last quarter of 2015, but it’s a big head start over some rivals.
The decision to introduce its very own mobile pay service was to save Walmart customers time and money, spokeswoman Molly Blakeman explains to Open Mobile Media. “It’s a fast, easy and secure way for our customers to pay in our stores. It’s going to improve checkout and dramatically expand access to mobile payment services for the 140 million customers that shop weekly at Wal-Mart.”
Walmart Pay works with any major credit, debit, pre-paid or Walmart gift card. It’s all about “bridging the digital and physical divide”, Blakeman explains. Implementing this functionality within the Walmart app is all part of the retailers omnichannel strategy. “So that our customer hopefully can’t remember whether they bought something in the app, online or in the store”.
The mobile payment system is fully integrated in the Walmart app ecosystem and easily interacts with functionalities like Savings Catcher that helps consumer take advantage of the retailers’ best price policy.
Walmart Pay creates major opportunities for the retailer, says Bart Hesselmans, director omnichannel at Dutch consultancy firm IG&H. “Combining the payment information of consumers with their app makes it possible to visualize customer behaviour and quantify that. With this data Walmart can create an even more personal and intimate relationship with consumers across all retail channels.” It’s all aimed at cultivating loyalty to the brand. But Walmart Pay could do even more, Hesselmans thinks. It might even be possible to tailor inventory, the store interior and in-store promotions to local customers that use the mobile payment system.
But the most important feature of Walmart Pay is that it keeps consumer data out of the hands of Silicon Valley. Even though companies like Apple and Google are adamant about protecting data, the latter thrives on selling data to third parties in order to profit from advertisements. Consumer data is a valuable commodity, a fact that companies in other industries are also realizing.
Wal-Mart has millions of potential users for its Walmart Pay system. But will the customer use it? According to survey results published in January by market research group Phoenix Marketing International 38 percent of all Apple Pay purchases by users with (only) a credit card coupled to the mobile payment system were made in-app. 62 percent purchases were made in stores.
That sounds like a lot, but most of the transactions took place at just five retailers according to Leon Majors, senior vice president of payments, at Phoenix Payments Systems Practice: “McDonald's has the highest usage frequency percentage with 38 percent of its Apple Pay credit card-using customers making an Apple Pay credit card purchase at least once a month at McDonald's. Only four other retailers have relatively high percentages on this measure – Walgreen's, Subway, Whole Foods and Target."
Embedding Walmart Pay inside the retailer’s own mobile app might do the trick in getting consumers to pay with this feature. “Retailer specific mobile payment systems have a chance of catching on if customers feel that it benefits them,” Hesselmans says. The integration with the Savings Catcher is a start, but Walmart may have to consider rolling out more incentives to keep consumers interested in using Wal-Mart Pay.
Franco Anselmi who is a strategist at consultancy Kurt Salmon in Germany is a little bit sceptical about the success of this retailer specific mobile payment system. “Walmart wants a payment solution that is easier than adapting a global solution like Apple Pay. But very often these isolated solutions don’t work out.” The fact that Walmart Pay uses QR-codes is also a point of contention for him. “These are really cumbersome and unstable,” Anselmi says. It’s not just because scanning these codes can prove difficult, but also because customers have to open the Walmart app first to do this.
Walmart spokeswoman Blakeman contends, “QR codes are something our customers are familiar with. It’s an existing technology that’s easy to use.”
At the core of the introduction of Walmart Pay was speed, Anselmi speculates. The progress of the CurrentC mobile payment system, intended for use by all retailers in the MCX consortium, was stalled in 2014 by a major hack exposing user data. Instead of waiting for the launch of CurrentC or accepting Apple Pay and choosing to adapt and align its practices with the company in Cupertino, Walmart chose to carve out its own piece of the pie.
It could prove to be a lucrative move considering the 140 million American customers that shop at the retailer every week. Walmart Pay circumvents credit card transaction costs, usually an inquiry fee between 20 and 35 cents, an additional average of 2.3 percent transaction fee and equipment fees of tens of dollars for each card terminal.
Although multiple partners in the MCX consortium have started to accept Apple Play and Target is even developing its own alternative, Walmart remains committed to CurrentC. “We see Walmart Pay as complementary to CurrentC and some of the other mobile payments out there”, Blakeman reiterates.
The retailer, however, seems to have abandoned the aim of CurrentC, the development of a universal payment system for retailers that excludes Apple Pay. “CurrentC and Walmart Pay can live within the same store. We’ve built our platform to someday integrate other mobile wallets.”
And this might provide Walmart with a distinct advantage over the available mobile payment systems. Rather than pushing out competitors it can absorb alternatives within its own infrastructure. “Walmart is big enough to create a standard payment system of its own,” Anselmi says. “These millions of consumers might even force other retailers to adopt Wal-Mart Pay.”

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