Walmart Enters the Payment Wars

There’s a major new combatant in the ever-escalating online payment application wars. The world’s largest retailer, Walmart Stores Inc. (NYSE: WMT), is apparently testing its own solution, called Walmart Pay.

The application is currently being tested in several U.S. stores and will receive a wide rollout after the holiday rush ends, Daniel Eckert, Walmart’s senior vice president of services, told a variety of media outlets. Few details about the app or available, but it is compatible with Apple Pay, Android Pay and major credit and debit cards, Reuters reported.

No specific credit card brands were mentioned, although it is safe to assume the three biggest cards—Visa, MasterCard and American Express—will be accessible via Walmart Pay. Although, it may not accept the Discover Card; it took Apple Pay nearly a year to integrate with that brand. Media reports did not say whether bank accounts would be accessible via the app or not. Nor did say if it would be compatible with Samsung Pay or not.

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Walmart Pay could be available throughout the United States in the first half of 2016, Eckert said. He did not say when or if the app would be available in other countries where Walmart operates, such as Canada, nor did Eckert say if Walmart Pay could be used at Walmart’s club store subsidiary, Sam’s Club, or not.

One interesting possibility is that Walmart is planning to start accepting Apple Inc.’s (NASDAQ: AAPL) Apple Pay and Alphabet Inc.’s (NASDAQ: GOOG) Android Pay in its stores when Walmart Pay appears. There is a strong incentive for Walmart to do so; accepting such electronic payment decreases costs by increasing efficiency and eliminating paperwork, something Walmart loves.

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It can also reduce labor costs by reducing the need for cashiers and speed up the checkout process. This can help Walmart deal with growing labor costs and with slow checkout lines, which have become a major customer complaint at its stores.

Is Walmart Finished with CurrentC?

Eckert did not specify how the new app affects Walmart’s relationship with the Merchant Customer Exchange, or MCX, a consortium of retailers. MCX is testing its own application, CurrentC, at a variety of retail outlets in the Columbus, Ohio, area. Walmart is a member of the MCX, and CurrentC is being tested at Sam’s Club and Walmart locations in Columbus.

Although Eckert did note that Walmart is working with “mobile wallet developers,” he did not identify which ones. One probable company that Walmart is working with is JPMorgan Chase (NYSE: JPM), America’s largest bank, which is developing its own Chase Pay solution.

Other organizations that Walmart could be working with include American Express (NYSE: AXP), which sells banking solutions through Walmart under the Bluebird brand name, and PayPal Holdings Inc. (NASDAQ: PYPL). Sam’s Club recently started accepting Amex cards, which indicates a close relationship between the two companies.

It looks as if the payment wars are heating up in a big way. Walmart is an aggressive competitor with a lot of money and vast marketing capabilities. It already offers a wide variety of financial services, including check cashing and money transfers.
One has to wonder if other major retailers like Kroger (NYSE: KR) and Target (NYSE: TGT) will jump into the payment application wars. Kroger in particular has remained out of the fray. Target is testing CurrentC in Columbus, and it allows customers to access Apple Pay through its shopping app.

Walmart’s action proves that payment apps are here to stay. Apple’s gamble on Apple Pay has just been validated. I have to wonder how the big credit card companies are going to react to this.

Disclosure: the blogger currently owns shares of PayPal and Kroger.