Brian Day, TMG
By Ray Birch
DES MOINES, Iowa—While a number of analysts told CUToday.info they see Walmart Pay as a positive for FIs, there are those concerned that the new digital wallet won’t be good for mobile payments.
Worries center around Walmart’s choice to go with QR codes at the point of sale, which experts contend will only confuse consumers just starting to get accustomed to tapping with their NFC wallets, like Apple Pay.
“As we hear of these new wallet announcements, and there were announcements aplenty in 2015, they are all exciting,” said Brian Day, director of digital strategy at The Members Group, who said consumers would benefit from a consistent payment experience among all digital wallets.
Apple Pay and Android Pay use NFC, as does Samsung Pay. But Samsung Pay also uses "magnetic secure transmission" (MST), which "spoofs" a traditional card swipe with magnetic fields enabling that wallet to be used on most mag-stripe readers not equipped with NFC.
QR Codes
The big concern, said Day, is around wallets that use QR codes—where consumers display a barcode on their phone to be scanned by the POS term
Michelle Thornton, CO-OP FS
inal or vice versa—a completely different and slower payment experience than NFC.
“This fragmentation is not good for the overall consumer mobile payment experience,” said Day. “This is especially true with Walmart Pay, and MCX (which said it plans to use QR codes with its CurrentC wallet).” Chase Pay, as well, uses QR codes.
“QR codes is a fundamentally different technology and payment experience than contactless,” noted Day. “Again, while all these wallet announcements are exciting, when we look at the impact on consumers from this fragmentation and as more wallets forge their own paths, this is not a recipe for mobile payments to take hold.”
Day pointed out that even consumers familiar with paying via barcode at Starbucks will have a different payment experience with Walmart Pay.
“From what I understand, Walmart is going to display the barcode on POS terminals and the customer will scan it with their phone,” explained Day. “Starbucks has the customer display the barcode on their phone, which is then scanned by the POS terminal. So when we look at the use of barcodes, there is not a standard for how that technology will be used, which creates inconsistencies.”
NFC No Longer Taking Back Seat
Not that long ago, NFC was taking a backseat to QR codes. However that changed with Apple finally adding NFC capability to the iPhone, and with the
Tom Davis, CSCU
introduction of Apple Pay and the other NFC-enabled wallets that have quickly followed.
Payments analysts see QR codes as a less desirable experience than NFC.
“With Walmart Pay it will be interesting to see how the market responds to QR codes,” said Michelle Thornton, manager of core products for CO-OP Financial Services in Ranch-Cucamonga, Calif. “It is not a very elegant payment process.”
But sources emphasized that when the U.S. mobile payments space eventually moves to a more consistent POS experience, the winning wallets will not be determined by retailers or tech companies.
“Consumers will make that choice,” said Tom Davis, chief technology officer with CSCU in St. Petersburg, Fla.
Davis cited advantages to retailers having their own proximity wallet that can be used seamlessly between online and point of sale purchases, driving greater customer loyalty. “That is attractive to Walmart and I expect that will be attractive to a lot of the other MCX merchants, who I think will begin to look at wallets of their own.”
Cindy McGinness, PSCU
Thornton agreed that consumers in the end will choose the winning wallets, adding that most cardholders will not switch phones based on the mobile payment experience.
“It will be interesting to watch how all this plays out and where these wallets will converge or not converge,” said Thornton. “CO-OP is watching this space closely and we are doing whatever we can to make sure our credit unions are part of the mix.”
Walmart's Angle?
Cindy McGinness, manager of digital channels at PSCU in St., Petersburg, Fla., said that currently it is difficult to determine Walmart’s strategy.
“But it will be interesting to see how things pan out. It is too soon to tell how merchant wallets like Walmart Pay will compare to Apple, Samsung and Google as consumers warm up to the idea of mobile payments, and providers compete for the adoption of their wallet,” McGinness said. “There are a variety of choices for consumers in the mobile payments space, and eventually, there will be a few that stand out from the rest. But how they do that, and how long it takes, is yet to be determined.”