Walmart Pay


As I’ve stated before, there are 3 industrys that enable mobile payments: grocery, gas, transit (frequency of use). Given WMT’s scale, consumer loyalty, mobile success, cards on file and acceptance cost efficiencies this is a no brainer. My summary is that they have used their unique assets in a new and innovative way, with superb timing.

Walmart’s payment acceptance advantages (Settlement, VPP, and Issuer Negotiated discounts) give it the ability to accept payments at a lower cost than any other retailer. Why would it want to subordinate these advantages within a consortium of competitors?

I do think that MCX has potential, but most likely it will be as a decoupled debit facility, or some kind of coupon issuance redemption infrastructure. 4+ years is a long time for a consortium. In this span, Walmart and Target have accelerated their lead  beyond the other retailers in mobile, payments, loyalty. Yes WMT is still in MCX, and so is target +++ but the brain trust behind MCX is no pushing objectives within their own community (see blog). There is still great opportunity for collaboration, but each participant has needs to select and monetize these collaborative partnerships differently (a focus for us at Commerce Signals).

Biggest Surprises

  • “accept all cards” in the WMT wallet. This is a BIG WIN for V/MA.. but it came at the BIG expense of the ~$5B settlement (V alone).  Remember MCX was dead set against use of anything but ACH.
  • QR codes. The use of a QR code means transaction will be treated as CNP. V/MA were surprised by today’s announcement too. WMT does not have the same incentive to tokenize (given their rates and their cards on file (COF)). I would expect to see them switch when they new card holder rate tier appears (in next 2 months for Summer deadline). Funny that WMT, Amazon, Apple, Google, Samsung will all be pushing the banks on tokenization.
  • Chase Pay.. how brilliant is this timing.. get chase to give away to farm (to WMT and Target) in hopes of being perceived as a payment instrument for MCX… then pull away and keep all the new discounts. Too funny.. holy crap every retailer should go by mike cook and his team a beer for that one.
  • MCX.. still alive..? doing what? While it was very polite of WMT to show its continuing support.. I think the MCX team must be crystal clear on what it will do for retailers. Retailers should want a common facility for payment/mobile things.. but wow does this team need retooling
  • Paypal.. I wonder if this is why the Paydiant team wanted to sell..  Not a great thing for my friends there. But I’m starting to see some new opportunities for them.. They are a natural alliance partner of merchants.. and the merchant’s competing consortium is not moving the ball. Would be cool if Paypal could partner with an acquirer to kill chasepay.


5 thoughts on “Walmart Pay”

  1. Tom,

    I love your blog, and generally find your analysis to be spot on. Here, I have some quibbles. Walmart is not the #2 online retailer – in the US, ebay is clearly ahead of it, and internationally there are a few more. Also, Amazon’s site/app sells more like $250B annually – from a payments, data perspective, 3rd party sales are the same as in house sales. Amazon collects data and has payment credentials on more than 250M users, about 45M of which are Prime customers. It has VERY regular interactions with those customers, which it uses very effectively to push deals and recommend products. 44% of US online shopping begins with Amazon, and the large majority of that ENDS with Amazon. 68% of US smartphones have the Amazon App. Amazon’s US e-commerce sales grew 28% YoY in 3Q, Walmart’s ecommerce sales decelerated to just 10% growth. The majority of Walmart’s shopping traffic is coming from Google. Walmart Pay is a good effort, but I’m not sure it is much defense against much stronger industry tides.

    1. Thanks for participating.. I’m a guy in the amazon camp.. I don’t think of eBay as a retailer.. other than that I’ll take your data. Relative market position isn’t central to my thesis on mobile wallet (at POS) strategy. I would love to see the details of the intersection between Amazon’ customers and walmart’s..

  2. Tom, thanks for the insight.

    Only question / comment I have is the QR model being CNP.

    Here’s what I understand: there are two models of QR redemption…
    1) I scan a QR code that is presented on the POS terminal, the app on my phone + my phone’s network connection connects to the stores server and the basket, I submit a payment auth request and it re-connects me and the transaction on auth response.

    2) The cashier uses a barcode scanner to scan a barcode I present (like Starbucks) and the transaction is submitted through the merchant’s acquirer like any other payment request.

    I might be mistaken but I believe WalMart is using flavor #1 and that transaction will look very much like a CNP transaction coming from the consumer’s device. Flavor #2, used by Target (and others) is a CP transaction and the barcode payment bundle is structured in line with the EMVCo Token spec (barcode use case). Once the payment bundle is scanned into the POS, it wont look any different than a payment bundle that was sent via NFC, as an example.

    So I think the clarification to your blog would be that “WalMart’s flavor of QR redemption, will result in the transaction being treated like a CNP transaction.” Others may pursue flavor 2 and benefit from CP rates.

    But assuming they’ve completed some negotiations with networks / issuers perhaps the CP vs CNP debate relative to WMT is a distinction without a difference given that they may have negotiated different rates.

    And you got to love the dramatic element of these battles between merchants and issuers – and amazing how the networks always seem to come out in a stronger position.

    A final thought: I’ve always said “we’ll never get out of the first inning of the mobile payments game until WalMart makes a move.” Once these solutions roll out in first half of 2016, we’ll have officially moved to the 2nd inning of the 1st game in a best of 7 series. In other words, a great milestone but we’ll still have a long way to go.

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