ANOTHER WAY TO PAY

Walmart is following Starbucks’ model in mobile payments

Obsession
Future of Finance
Obsession
Future of Finance

Retailers have been relatively slow to accept mobile payments. There’s the necessary hardware upgrades, but there’s also the question of how they might be able to play a direct role in the technology. The world’s largest retailer has found its answer, at least in part, and it looks a lot like what has made Starbucks a mobile-payments leader.

Walmart today (Dec. 10) announced Walmart Pay, a mobile wallet that will live inside its existing iOS and Android app. Users can choose any payment method stored in their Walmart.com accounts. Walmart said it’s currently being tested in a pilot program in Bentonville, Arkansas, where the company is headquartered. It is expected to be available nationwide in the first half of 2016.

With the new offering, Walmart enters an increasingly competitive space in the US. Over the past year, tech giants Apple, Google, and Samsung have all released mobile wallets, as have several banks, including Chase and Capital One. Use of mobile payments is steadily growing, but only 18% of US consumers in a recent survey by Deloitte said they made an in-store purchase with their phone this year. A March 2015 Federal Reserve report said 75% of consumers still find cash and credit/debit cards more convenient.

Still, it appears Walmart wants to enter the game with its own offering before any winners are decided. Walmart Pay uses a QR code, essentially a barcode, that customers scan when checking out. That’s unlike most other mobile wallets. For example, Apple Pay works by tapping your iPhone or Apple Watch against a payment terminal. Walmart said the transactions essentially work as an in-app payment, so no information is exchanged in stores.

The closest comparison to Walmart Pay is Starbucks’ app, which combines payments with its loyalty program. The coffee chain sees 20% of sales through its mobile app.

Walmart Pay is the retailer’s second big push into payments. In 2012, Walmart led an initiative with other major US retailers to build its own mobile wallet, a group called MCX. But that has had trouble getting off the ground. MCX CEO Brian Mooney said in August that it won’t be ready for a wide release until 2016.

A spokesperson for Walmart said the company remains committed to MCX and told Quartz that the retailer is in talks with other mobile wallets to integrate their services into Walmart Pay. That might look similar to Starbucks, which rolled out in-app support for Apple Pay in Feb. 2015, and will add in-store Apple Pay payments in 2016. Walmart has not announced any plans to accept Apple Pay or any other mobile wallets yet.

The new offering could find a large audience—22 million people use Walmart’s app monthly and 50% of the retailer’s sales came through mobile devices over the Black Friday and Cyber Monday weekend.

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