Walmart Pay Sparks a Mobile Independence Streak for Banks, Retailers

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Even though Walmart has been a key member and driving force behind the Merchant Customer Exchange joint venture to establish a new mobile wallet, the retailer's addition of Walmart Pay to its mobile app is consistent with strategy, and will lead to a wave of individual bank and retailer initiatives.

As far back as 2011, Walmart vice president and treasurer Michael A. Cook made it clear at a SourceMedia payments conference in Las Vegas that the company wasn't going to abandon its brand when it came to payments.

“If my customer is using my shopping app to locate my stores, using it to check in to receive offers at the store, using it to navigate the store and find products and reviews, why would I want them to close my app and open up someone else’s app for payment?” Cook asked.

The answer is, Walmart wouldn't. And it's likely that other members of MCX, which has been working more than three years to develop the yet-to-be-launched CurrentC mobile wallet, will do the same, along with banks that want to link wallets into retailer apps.

"Walmart has translated the competency and learning from their experience with MCX by investing in an unquestionable asset — their own brand and own accounts in their own app," said Richard Crone, chief executive of San Carlos, Calif.-based payments consulting firm Crone Consulting LLC.

Others will do the same because the technology developed to operate MCX's CurrentC wallet will translate to a retailer's branded app, Crone said.

"I see Target rebranding its RedCard as Target Pay because they don't need to be tied to a card," Crone added. "We may see Best Buy Pay or Meijer Pay because any one of the other 39 MCX merchants can turn this on instantly."

Walmart has been a member of MCX since its inception in 2012. The giant retailer has never cozied up to any of the current mobile wallet offerings, but also has never officially taken a stance contrary to what the joint venture set as its mission – to lower transaction fees, keep customer data in the hands of retailers and establish a similar, yet seamless, payment, loyalty and customer experience in member stores.

However, Walmart Pay, while using similar QR code technology, allows users to link credit, debit or gift cards as the payment method, while MCX will operate through ACH with users linking a bank account to the CurrentC wallet.

To date, MCX has not moved the CurrentC wallet past a testing stage it announced last summer in Columbus, Ohio. The joint venture is entering its fourth year of development.Through all of the challenges MCX has faced, CEO Brian Mooney has insisted the company is in the mobile wallet and commerce game for the "long game."

And the consortium still views Walmart as a vital part of its process. “Walmart continues to be a strong and supportive partner of MCX and CurrentC – and our goals remain the same – to offer consumers choices and convenience at checkout," an MCX spokesperson stated in an e-mail to PaymentsSource.

MCX remains focused on refining and improving CurrentC prior to its rollout, the company stated.

Walmart did not respond to inquiries prior to deadline.

If Walmart Pay were to be viewed in the industry as a deterrent to MCX, the timing of the retailer's move to include a payment function in its mobile app would then be surprising. MCX scored possibly its most significant win in late October when completing a deal with JPMorgan Chase in which Chase Pay, a mobile wallet promising lower fees for merchants, would be accepted side-by-side with the CurrentC mobile wallet.But that agreement reveals how easy it will be for banks or credit unions to link into retailers' branded payment apps through a software development kit and move transactions along the same rails, said Paul Fiore, CEO of CU Wallet, a consortium of credit unions and wallet technology managers.

"With the SDK, the merchant rolling out an app is going to have to decide whether to keep it as a branded app or if will it work with other branded apps, like a financial institution such as Chase," Fiore said.

If a retailer opts for an open wallet, it will also have to determine what payment instruments it will accept, Fiore said. "It can be gift cards, PayPal, ACH, credit or debit cards and just be open to those bank instruments," he added.

CU Wallet works with credit union clients to make their branded wallets work within retailer apps.

"We think merchants will be looking to sell as much product as possible through as many payment options as possible," Fiore said. "That's how MCX and Chase got together."

Those types of scenarios may change the feeling of some banks toward Walmart, traditionally recognized as a potential competitor because of its partnership with American Express the past few years for Bluebird prepaid cards and cash reload networks. The retailer has also been aggressive with other payments technologies for its customers, though it has never embraced Near Field Communication (NFC) for contactless payments, leaving Apple Pay, Samsung Pay and Android Pay out of the in-store mix.

Still, Walmart Pay has solid footing with an existing customer base of 22 million using the current Walmart app, immediately giving it the same potential as the popular Starbucks mobile app, said Penny Gillespie, research director for Gartner.

"Walmart has done something very similar to Starbucks in tying the payment to a mobile app much larger in scope with shopping lists, loyalty and a store locator," Gillespie said.

A Walmart customer already using the app in the store will find it a natural progression to use it for payments as well, Gillespie added.

Still, a trend of retailers creating branded payment apps does raise questions about where MCX's CurrentC wallet is going, Gillespie said.

"I worked for a banking consortium years ago that decided to get together to leverage technology for web banking," she said. "In three years, it dissolved because each bank came to realize that web banking was a differentiator and not something to collaborate on with competitors."

The same fate could unfold for MCX over time because "all of the sudden, payments are strategic," Gillespie added.

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