Retailers should seek to own mobile payments
When Walmart first announced plans in December for its own mobile-payments system, one of the initial thoughts from the industry was whether we needed another mobile wallet in the market.
But when you considered Walmart's refusal to accept third-party mobile wallets at its stores, and its staunch support of the Merchant Customer Exchange's effort, Walmart Pay made sense.
Add in the fact that some 22 million consumers are actively using Walmart's app each month across different Android and iOS devices and Walmart Pay is a no-brainer.
Shortly after Walmart announced its plans, rumors began to circulate that Kohl's and Target were thinking about launching similar mobile efforts.
That big-box retailers want to keep their brand top-of-mind with consumers at the point-of-purchase is no surprise as third-party providers haven't given merchants much incentive to embrace them.
This was one of many topics discussed during a panel this past week at the ShopTalk conference in Las Vegas.
"Something very important is going on here," Chris Gardner, head of in-store products for PayPal, told attendees during a panel discussion. "One of the things we keep saying is that retailers should control as much as their own real estate with payments.
"Retailers have to let consumers interact with them the way they want to interact, especially with all these options. Walmart is doing exactly what I would tell them to do."
The same can be said for JPMorgan Chase and Chase Pay.
The bank announced Chase Pay in October at the annual Money 20/20 conference. At the time, Chase said the new mobile wallet "solves a number of pain points for consumers and merchants. It will improve the customer experience and drive down the cost of payments."
One aspect of Chase Pay that the bank didn't mention is that the app will keep its customers within the "four walls" of the financial institution.
Banks lose their branding when customers choose to pay with a third-party mobile wallet. As more FIs add a payments component to their Android mobile banking apps, the brand is front-and-center once again.
Chase went in a different direction altogether and decided to release a standalone app based on MCX's approach with QR codes.
"We'll be piloting [Chase Pay] at the end of the summer and will have a phased launch in the fourth quarter," Kim Fitzsimmons, head of Chase's global e-commerce and large omnichannel commerce solutions, said during the panel discussion.
Fitzsimmons said Chase will partner with merchants that have a habitual nature to them and that's why Starbucks is an initial Chase Pay partner.
"Starbucks is one of the merchants that have gotten mobile right," she said. "Partnering with them is a good way for our customers to get use to [paying with their phone]."
The panel also touched upon a number of topics related to mobile payments in the retail environment:
- Fitzsimmons on current POS systems: "The entire POS system has to change. The whole process of checking out has to change for us to get the loyalty aspect [right]"
- Patrick Gauthier, vice president of Amazon Payments, on merchants' priorities: "Why should we put all the energy into the one minute it takes to pay? Retailers should be in the business of connecting with the customer [before payment]. That's where the future lies."
- Spencer Spinnell, director of emerging platforms at Google, on in-store mobile payments: We're taking a very long view. We're investing heavily is passing nonpayment credentials with a tap. The habituation isn't there [for consumers]. The acceptance footprint isn't there from merchants."
Photo courtesy of Mike Mozart.
Will Hernandez / Will Hernandez has 14 years of experience ranging from newspapers to wire services and trade publications. Before becoming Editor of MobilePaymentsToday.com, he spent two years as the content manager for PaymentsJournal.com, a leading payments industry news aggregator and information hub published by Mercator Advisory Group. Will spent four years covering the payments industry as an associate editor for multiple publications in SourceMedia's Payments Group based in Chicago.