This market has come a long way since the one-size-fits-all strategy behind the Merchant Customer Exchange's CurrentC wallet, which sought to solidify merchants' control of customer data. Ultimately, the stores behind MCX — including heavyweights Walmart and Target — realized that they didn't need to confront Apple Pay or Android Pay head-on.
Today's mobile-savvy consumer might have a variety of retailer apps on their phones, but they probably do not think of them as mobile wallets. In addition to payments, these apps handle marketing, loyalty, rewards and customer service — often linking to programs that shoppers regularly use in other channels.
CVS Pay's contrarian approach
Instead, CVS developed CVS Pay, which recognizes that the biggest pain point in CVS stores is not the process of moving money, but the many other interactions that occur at the point of sale.
A customer getting medicine may need to provide a prescription, ID, birth date PIN, loyalty card and other information before they even get to the payment. By putting all of these things into a mobile app, CVS is attempting to remove every obstacle that leads up to the payment.
Walgreens, a CVS competitor, has taken a similar approach to mobile technology. Its 2011 "Refill by Scan" feature lets consumers request prescription refills by scanning bar codes with a smartphone's camera. The Balance Financial Prepaid Mastercard, launched in 2013, similarly streamlines the experience by combining a payments card with a loyalty card.
CVS will rely on its customers' existing use of digital technology to drive adoption of its mobile payments app. The CVS Pay feature is designed to tie into other interactions that come before the payment. In this way, it is similar to the wildly successful Starbucks app, which provides a way to reload balances and check rewards before the customer needs to make a payment.