Don't Bank on Walmart Pay

Customers need regular incentives to use a retailer's app.

Everyday Low Prices

Source: Bloomberg

Walmart held a closed press conference on Wednesday to announce the launch of Walmart Pay, which will let shoppers pay for store purchases through the retailer's mobile app. Ironically, the big, fancy tech announcement was accompanied by a webcast glitch that forced Walmart's global e-commerce chief to repeat himself several times before the malfunction was fixed, people on the call said. 

Was it a harbinger of what's to come for Walmart Pay -- a bunch of hype that fizzles out during execution? 

The move was heralded as a challenge to other mobile-payment methods such as Apple Pay, which Walmart still refuses to accept at its 4,600 U.S. stores, making it one of the last major retailers to do so. It's also a sign that MCX, the multi-retailer payment consortium once nicknamed the Mike Cook Exchange after Walmart's payments chief, is no longer a top priority for the company

By going at it alone, Walmart is making a big bet that the 140 million shoppers coming into its stores on a weekly basis will be so loyal to Walmart that they'll want to give the retailer a piece of prime real estate on their mobile devices. It's also a bet against Apple Pay, which accounts for just 1 percent of all retail transactions, but is growing steadily, according to Apple CEO Tim Cook. 

Though Walmart's e-commerce sales growth has slowed, its mobile app usage has actually been a bright spot. The number of Walmart app users rose to 23 million in October, the highest of any retailer after Amazon's 43 million, according to data from comScore.  

App Race

Mobile App Users By Retailer

Source: ComScore

That big pop you see in the chart above, to 14 million users in August 2014 from 4 million the month before, was the result of the launch of a price-comparison tool called Savings Catcher. If the tool finds that a competitor's product is priced lower than what a user paid at Walmart, that user gets an eGift card for the difference.

The app hooked people by giving them a compelling reason to use it: big discounts. But growth has stalled over the past year as Walmart dialed back the discounts and stopped matching prices at drug stores and on bakery and produce items

The retail industry's most successful app operator, Starbucks, convinced customers to use its payment app by enticing them with free coffee. Following its lead is Dunkin' Donuts, which launched a mobile pay option back in 2012, but just recently decided to offer a rewards program to boost consumer uptake

Walmart Pay promises no such perks, which could make it harder to earn a spot on shoppers’ phones. Walmart didn't forecast how many app downloads it expects with Walmart Pay. But the majority of smartphone users are only willing to have three or fewer mobile retail apps on their phone at once, according to comScore. 

Launching a payment function on its app makes plenty of sense for Walmart -- it can capture data about shopper habits without offering a loyalty program and tap into expanding use of mobile payments.

On The Rise

One in five smartphone users will use mobile payments by next year

Source: eMarketer

Walmart Pay will also help get people through checkout at its stores faster, an increasing problem with the adoption of chip-and-pin credit cards that add 5 to 10 seconds to customer checkout times. Half of Walmart's digital orders on Black Friday weekend were made through its app, and Walmart Pay might make such purchases go more smoothly for customers. 

It's just not clear how many shoppers will see the value in it, without getting something more than a few seconds of convenience in return. 

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

    To contact the author of this story:
    Shelly Banjo in New York at

    To contact the editor responsible for this story:
    Mark Gongloff at

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