Consumers show no signs of broadly embracing mobile wallets, but it’s clear from the aggressive mobile wallet plays of huge companies like Microsoft and Walmart that laying a foundation is important.
Walmart is adding hundreds of stores each week to its gradual rollout of Walmart Pay, its proprietary mobile wallet announced in December 2015, in hopes that consumers already using its app for certain services will access it to check out and pay at its stores.
After launching Walmart Pay in Texas and Arkansas in May and steadily expanding across the South, the app reached 15 states this week, including Iowa, Indiana and Michigan. Walmart said it would finish the job this summer.
The company has a long road ahead to building broad usage of the QR code-based mobile wallet, which requires consumers to open the app, select Walmart Pay, activate the camera and scan the QR code displayed on the store’s PIN pad. The app stores shoppers’ recent receipts and automatically incorporates funds consumers earn from its Savings Catcher sales price-matching feature.
While there is no certainty consumers will take to Walmart Pay with any more gusto than Apple Pay, Android Pay and Samsung, observers say the retailer—which so far doesn't support mobile wallets—wants to get its oar in the water early. So far the third-party mobile wallets have generated only tepid consumer interest, 20 months after the first of those, Apple Pay, debuted with broad support from U.S. banks.
Microsoft also has no simple path ahead connecting it broadly to consumers using mobile wallets, but analysts say the recent unveiling of Microsoft Wallet hints at a variety of possibilities at a time when much is in flux in mobile and digital payments.
Microsoft Wallet works only with Windows 10, which has less than 2% of the smartphone market, but the number of banks pledging support to its wallet already includes Bank of America, U.S. Bank and a handful of credit unions, with Chase Bank coming on board soon.
Beyond duplicating the model that already exists for other third-party mobile wallets like Apple Pay, Microsoft has many angles to expand on mobile payments in the future, given its global reach across products, services and platforms, said Sarah Grotta, a director with Mercator Advisory Service.
Microsoft already has stored the payment information for millions of its customers who routinely make Xbox, Office or Windows Store purchases, the Redmond, Wash.-based company said in its blog post about the new wallet.
Xbox Live alone, which drives a steady stream of gaming-related payments, has more than 48 million users. Combined with the millions of consumers who have other types of accounts with Microsoft, from Outlook to Excel, Skype and PowerPoint, its potential scale for a connected mobile wallet platform looks impressive.
Peer-to-peer payments are another area where Microsoft could eventually hope to get traction by combining its mobile wallet and breadth of consumer connections, Grotta suggested. A clue to that potential strategy is the effort Microsoft went to in 2015 to seek money transmitter licenses in all U.S. states requiring them.
“It’s expensive and time-consuming [to seek money-transmitter licenses] and a clear indication Microsoft is serious about payments and money moving in general,” Grotta said.
But with its paltry base of phones compatible with Microsoft Wallet, it would be difficult to create a network of P-to-P users to compare with the robust P-to-P momentum PayPal’s Venmo already enjoys, Grotta points out.
Microsoft’s recently announced $26 billion acquisition of LinkedIn could be another ramp to P-to-P payments, given the social network’s reach to 433 million users, but Grotta thinks it could be difficult to create incentives for LinkedIn’s professionals to exchange funds.
“Would I go to LinkedIn to split the lunch bill with a fellow employee, or pay for my share of the office party or a gift for a colleague? That seems like a stretch,” Grotta said, pointing out such occasions are too rare to drive broad, routine usage.
Domestic and global remittances using Microsoft Wallet are more promising, Grotta believes. Microsoft’s global scope could make it a formidable player in funds-transfers, combined with its status as a money-transmitter in the U.S., she said.
It’s also worth noting the newest version of 3D Secure will enable tokens in apps and in browsers, where Microsoft has a big footprint, added Tim Sloane, another director at Mercator.
A movement to drive e-commerce purchases to browser-based mobile apps is taking shape, Sloane pointed out, with Apple recently announcing an in-browser Apple Pay solution for Safari.
“Google is putting mobile wallet-compatible implementation into Chrome,” Sloane noted.
Microsoft has not disclosed its long-term plans, but the company’s moves in mobile wallets—like those of other giants in the consumer marketing and technology spectrum—are worth noting simply because of its size and reach, Grotta concluded. “Microsoft could go in all sorts of directions,” she said.