July 11, 2016
It hasn’t been even two weeks since the death of CurrentC and Walmart’s Wednesday announcement looks like an additional kick to the barely-breathing body of MCX. The second largest retailer in the world announced the nationwide rollout of its mobile payment solution, Walmart Pay, in the US.
Over the past few months, Walmart has been gradually rolling out its proprietary payment solution across the states and made an announcement on June 6 that Walmart Pay is now available in more than 4,600 Walmart stores nationwide and works with any credit, debit, prepaid or Walmart gift card that is linked to the Walmart app.
As Daniel Eckert, SVP of Services at Walmart US, commented in the official press release, We want to make every day easier for busy families. We’re connecting all the parts of Walmart into one seamless shopping experience with great stores, easy pickup, fast delivery, frictionless checkout and apps and websites that are simple to use.
Although the solution has been rolling out gradually, the retailer claims strong growth for Walmart Pay. Walmart’s data suggests that 88% of transactions come from repeat Walmart Pay users, indicating a high satisfaction rate. Indeed, the retailer also says that three out of four customers gave a five-star rating to Walmart Pay and four out of five would recommend it. What’s even more impressive is that Walmart Pay saw a 45% boost in transactions last week alone.
One of the most interesting and key differences between Walmart Pay and other big Pays (eg: Apple, Starbucks) is that it utilizes QR-codes to perform a transaction (when was the last time someone made a big bet on QR-codes?). Some believe that QR-codes have been dead since 2013, but Walmart apparently sees something in the technology to offer it to its massive customer base.
The whole payment process at the POS register can be described as open, scan, done. After entering a unique four-digit security PIN or using Touch ID, customers will need open their camera and hold the phone over the QR-code on a terminal to scan and resume the payment.
QR-code based transactions are not particularly smooth or seamless and Walmart Pay will certainly not be the next Starbucks app in terms of customer experience if it sticks to QR. For comparison, Apple Pay is automatically triggered when the accepting register is nearby.
Reliance on the ‘dead’ QR-code is not the only thing different with Walmart Pay. The retailer’s approach contrasts with Apple, Samsung and Android Pay on the matter of data storage as well.
Walmart claims that no payment information is stored on customers’ phones or registers. Instead, it will store information on Walmart servers, so it will be just like storing card information with AWS.
By contrast, Apple, Samsung and Android Pay use alternative card numbers for added security, so if hackers break into a merchant's system, they wouldn't be able to go on a buying spree. Walmart uses regular card numbers, but it insists it keeps the information secure.
The retailer claims that its Walmart App has 20 million active users, which appears to be a great base for Walmart Pay to start and maybe take share from prominent players like Apple Pay (>12 million monthly users), Samsung Pay and Android Pay (about 5 million monthly users each).
Given its leading position as the second largest retailer in the world after Alibaba, and its massive army of 260 million customers visiting more than 11,500 Walmart stores under 63 banners in 28 countries and e-commerce sites in 11 countries each week, there is a good chance that Walmart Pay is here to stay and may even succeed over the rivals.
The retailer promises not to stop at the current level of development. Walmart Pay is just the beginning, said Eckert. We’re building deeper relationships with our customers across our ecosystem and are looking forward to delivering new tools like Walmart Pay that allow them to use the Walmart App as their remote control for a faster, more convenient shopping experience.
Although Walmart doesn’t say the actual number of active users of Walmart Pay or what percentage of total transactions they comprise, it is probably still a relatively small number. At the moment customers can’t use other wallets like Apple Pay within the app but rather than Walmart Pay, the retailer says that it is looking to integrate other payment systems into Walmart Pay. The expectation is that it is a work in progress and there promising opportunities for Walmart in the mobile payment industry. Among the biggest opportunities are check-cashing and stored value from paychecks within the app. In fact, the retailer already does quite a lot of check cashing with customers spending their paychecks directly at Walmart.
Let’s also not forget that Walmart is the second-most-visited e-commerce site in the US with 88 million unique visitors per month. In the first fiscal quarter of 2016, Walmart’s $13-billion e-commerce business grew by 7%. In addition to store terminal as a usage place for Walmart Pay, the retailers’ massive online business is a fantastic opportunity to develop the payment solution into something greater.