Clarity or confusion? It’s in the eye of the beholder.

To some observers, mobile payments got a much-needed boost March 2 when reports emerged that Target Corp. and Wal-Mart Stores Inc. are working with several other retailers to create their own digital wallet.

Others suggest the initiative creates more confusion for reluctant consumers about an emerging industry. Now, marketing mavens will have to guide the public through the tumult as mobile-wallet companies jostle for elbowroom in the marketplace.

But Steve Mott, principal of BetterBuyDesign, a Stamford, Conn.-based consulting firm working with the retailers on development of the digital-wallet system, claims it is possibly none of the above.

“This concept has been in the works for some time, and it basically is the retailers saying they don’t want to see mobile-wallet technology die,” Mott says. “This is the first chance in 40 years to create a safer, more private and usable payment system that benefits everyone.”

In effect, retailers facing ongoing security problems with traditional credit cards fueled this initiative, as did merchants’ desire “to get rid of the Payment Card Industry Data Security Standard” compliance costs, Mott says.

Mostly, the retailers want other mobile-wallet providers to view the initiative as an open door to join in and create a system that benefits everyone while allowing merchants access to more consumer data, Mott notes.

The retailers view all mobile-wallet technologies as viable, Mott says. The retailers will listen to all overtures and ideas from technology companies, he adds.

Otherwise, it would appear the retailers simply are trying to join a technology race in which Google Inc.’s Google Wallet and the Isis mobile wallet led by major telecommunication companies have been established as pace cars, with companies such as PayPal Inc. looking to gain ground, Mott says.

Retailers will consider all of the technologies, including Near Field Communication, radio frequency identification, and software or cloud-based schemes, Mott suggests.

The retailers believe they can develop something more secure and easier for consumers to use. In addition, and quite likely of most importance to the retailers, the initiative represents a way for them to secure and control consumer data, Mott adds.

Big-box retailers are in a position to use mobile wallets, Joe Randazza, founder and chief executive of National Payment Card Association, tells ISO&Agent Weekly. Randazza has trumpeted the efforts of merchants moving into payments with decoupled debit cards since his Coconut Creek, Fla.-based organization was launched in 2004.

“Target can pull this off. Walmart can pull this off. But that’s not where PayPal and Google are going,” Randazza says. “Traditionally, they are going to go more widespread.”

Merchants are going to take the bank-account information they already collect for decoupled debit cards, which link a consumer’s checking account to a card not associated with that institution, and move those transactions to the chip-enabled smart phones, Randazza says.

Merchants also will take advantage of updated terminals that some payment networks already subsidize to accept mobile payments, he adds.

Mott contends the retailers expect to create something that all their peers can embrace, and no one retailer is going to strike out on its own with a digital wallet. “This is set up like a United Nations business model, with everyone having a say and everyone welcome to join in,” he contends.

Still, industry analysts are quickly processing the news, which appeared in the March 2 Wall Street Journal, and are formulating opinions based on what has unfolded in payments technology and marketing the past few years.

Randy Vanderhoof, executive of the Smart Card Alliance, was blunt in his view on the initiative.

“This action reflects the disruptive nature of mobile payments on the retail payments industry,” Vanderhoof suggests in an email statement. “The mobile operators and financial institutions are trying to build on the existing infrastructure, and merchants are looking at mobile as a chance to reshape the market under more favorable terms for themselves.”

Gil Luria, an analyst with Los Angeles-based Wedbush Securities, tells PaymentsSource the retailers need their own initiative so they can compete with an online retailer such as Inc. in what amounts to a data-control war.

“The online retailers know everything about the customer, but the brick-and-mortar retailers have no idea who you are when you slide your credit card through the reader for a purchase,” Luria says. “There is a huge need for them to figure out who their customers are and how to get them into the store to actually buy in that store.”

The mobile wallet technology could be a key to obtaining the customer data a retailer needs to increase sales, Luria says.

“I am sure all of these retailers got in a room somewhere and said they couldn’t wait for Visa or MasterCard or any of the other mobile wallets to do this for them because those companies just serve their own purposes,” Luria suggests.

On the other hand, PayPal Inc. could benefit the most from such a retailer initiative, mainly because the online-payments provider already has been involved in providing retailers the digital-wallet tools to target offers to consumers, Luria contends.

“This is an opportune time for retailers to have this [digital wallet], whether it is their own initiative or something they work on with PayPal,” Luria says.

PayPal Inc. executives were not available for comment.

A Google spokesperson issued a statement to media indicating the company welcomes new initiatives in the mobile-payment market.

“We think it’s great that there are other companies innovating in the payments space. This will create more choice for consumers, and in the end we believe choice is a great thing,” the spokesperson stated.

While the new initiative creates plenty of speculation and buzz within the industry, Scott Strumello, an associate with Auriemma Consulting Group, tells ISO&Agent Weekly that the reluctant consumer still holds the key.

“For consumers, the whole concept of mobile payments seems to be about filling a need that doesn’t exist so far,” Strumello says.

A recent Auriemma report indicates that, although younger adults are more receptive to mobile-payments than are those older than 45, “even younger consumers seem to be satisfied with existing payment methods,” Strumello adds.

By developing their own mobile-payments scheme, merchants may seek ways to get closer to customers or “a way around credit and debit card interchange,” Strumello suggests. “But if merchants can build a better mousetrap, I can’t say consumers won’t use it.”

Sean Sposito, Jackie Stewart and Kate Fitzgerald contributed to this story.

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