Target and Walmart Working Together on Mobile Payments

Discussion
Mar 02, 2012

Mobile payments are going to be big, as in billions of dollars big. That’s the general consensus in one story after another on the topic. Here on RetailWire last October, 80 percent of respondents to a poll said that Google’s Wallet had a big upside.

Google hasn’t been the only company pursuing the opportunity. Banks, credit card companies, mobile service providers, PayPal and others are getting into the race, all hoping to come up with the preferred payment solution for consumers and merchants alike.

Now comes a report by The Wall Street Journal that a group of roughly two dozen retailers, including Target and Walmart, are working together to develop their own system.

The retailers are said to be concerned about consumer privacy and security. They also believe there are opportunities to provide targeted offers to consumers making mobile payments that are not available in current options on the market.

"A number of merchants are surveying the first generation of solutions and have decided they need to and can build a better system," said Steve Mott, CEO of BetterBuyDesign, who is working with the retailers on the payment system.

Discussion Questions: Do you see any chance that consumers will become confused with so many competing mobile payment options becoming available in the future? Do you think the retailer group has an advantage or disadvantage over competitors developing separate mobile payment systems?

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16 Comments on "Target and Walmart Working Together on Mobile Payments"

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Max Goldberg
Guest
5 years 9 months ago

Not only is there a chance that consumers will become confused, it’s a guarantee. Consumers want things to be simple. They don’t want a myriad of exclusive, competitive payment options. They want to be able to use whatever method of payment they want whenever they want to use it.

Target can barely keep its website up and running. How is it going to offer an always-on payment system? And Walmart has had so many starts and stops with its online efforts, the same question can be asked.

Retailers and other companies (Google, eBay and the credit card companies) should work together to come up with common solutions and then quickly adopt them by rolling out the necessary hardware and software. Otherwise, we will be involved in another long, drawn out fight like Blu-Ray and HD, where consumers sit on the sidelines and no one wins.

Joel Rubinson
Guest
5 years 9 months ago

I think this is a big change, like using ATMs, credit cards, and buying online. In every case, there was substantial resistance at first until eventually adoption started to grow as the strange and new became familiar and accepted. Mobile payments will fall into this pattern. As to being confusing from the multitude of offers, yes, that will happen and there will be a shakeout, although there is no precedent that this needs to be one system. There are multiple ways to pay for things now, with retailer credit cards, etc.

Matt Schmitt
Guest
5 years 9 months ago

I think resistance, rather than confusion, is a danger with so many approaches and players trying to establish a leading standard. Retailers, tech companies, and financial services firms are all trying to navigate the landscape and establish a platform. Payments/transaction systems are very different animals than just another mobile app, and consumers are likely to demand a cohesive and unified option, or else they’ll just wait on the sidelines until a clear leader emerges over time.

Bill Robinson
Guest
Bill Robinson
5 years 9 months ago

This is an exciting and promising development. I’m old enough to remember when Visa and MasterCard first started making inroads into conventional retailing. Back in those days, most retailers offered three kinds of “payment systems” to their shoppers: house credit, layaway, and cash. Fast forward 40 years. Now the entire payment industry has replaced the first two and has cash in its sights. In the process the banks and processors have extracted hundreds of billions in fees from the retailers and even more from the shoppers in interest charges and fees.

Now in the dawn of this new age, I’d love to see the retail industry reassert itself as the primary conduit of payments. The banks have had their day. Now let’s leverage technology to reduce the enormous cost of the current system for both the shoppers and the stores. While we are it, let’s make it real-time and increase the utility.

Cathy Hotka
Guest
5 years 9 months ago

Sure, there could be some confusion in the beginning. But the stores are betting that customers will be creeped out by Google’s commitment to spying on customers. If stores can provide a viable alternative, they just might win.

Lee Kent
Guest
5 years 9 months ago

Consumers want convenience and they do not want to feel like the retailer is manipulating them in any way. As long as retailers face this issue with their own benefits in mind, it is not likely to survive past the pan flash. The long-term solutions will be the ones that give the consumers control and convenience. Just sayin’….

David Dorf
Guest
5 years 9 months ago

It will take a while for emerging payments to shake out, and in the meantime consumers will be confused. One thing is for sure: if mobile payments are to be successful, they must offer more than mag-stripe based payments. That is, they must offer coupons, loyalty, and other ancillary functionality. Otherwise, consumers won’t bother.

I don’t believe for a second that retailers formed this group to address security and privacy. They are tired of paying fees to banks, and they don’t want to let that happen again with emerging payments and digital coupons.

This is a great move for the retailers involved, but they have a daunting task ahead.

Ken Lonyai
Guest
5 years 9 months ago

It’s hard to believe that the true impetus is the fact that “retailers are said to be concerned about consumer privacy and security,” well maybe “said to be….”

This is an industry truly in its infancy. It’s way too early to predict how mobile payments will shake out years from now, but certainly there will be lots of consolidation and attrition, and eventually consumer choices will become clear.

Interesting comment from Bill Robinson: “The banks have had their day.”

Dan Raftery
Guest
5 years 9 months ago

The real issue here is not consumer confusion, nor is it one system’s advantage over others. Consumers will seek out the best solutions(s) that fit their lifestyles and the surviving solutions will co-exist in the marketplace. This is simply the evolution of retailer credit cards.

Rather, the real issue is the improved opportunity this could offer crooks. One of the seldom discussed problems with retailer credit cards is the relative ease they provide to identity thieves. The cost of fraudulent charges is huge and not going away. Even with leading edge security and protection, I don’t see high-tech crooks being stymied for long.

Mark Heckman
Guest
5 years 9 months ago

As in all things, the consumer will eventually become accustomed to mobile payment options, but there will ultimately be one, maybe two survivors left standing, not dozens to chose from. Until this new market settles, there could be some confusion. But in the long term, I think the options will be narrowed.

Ironically, the more likely impetus for Target and Walmart to work in tandem on any payment initiative is not centered on the consumer centricity and the option of mobile capabilities, but more likely the fact that almost any payment process that offers an alternative to Visa, MasterCard, Discover, and their onerous transaction fees and requirements is preferable.

Craig Sundstrom
Guest
5 years 9 months ago

At the risk of being a spoilsport, who cares? I don’t just mean who cares if there’s confusion, I mean who really cares how people pay? Oh sure, it will make a lot of difference to whoever it is who ends up collecting the $$$ in processing fees, but to everyone else? Maybe merchants think the fees will magically disappear, or at least be shifted to the consumer, but don’t bet on it (look at how online has now shifted the onus of shipping fees from the consumer to the seller). Whether you push buttons on a terminal, or push them on a phone, it’s pretty much the same thing.

Anne Bieler
Guest
Anne Bieler
5 years 9 months ago

Consumers will choose the system that best fits their needs, based on convenience and value of service. Adding more payment options will confuse everyone for awhile until the better solution evolves. Interesting that retailers are getting together on this one — it could work if security questions are addressed and well executed.

When debit cards were introduced into Canada, an independent non-banking group was formed, supported by all the member retailers, which offered an attractive fee for service scheme. Times and markets are different now, but certainly still an idea worth serious consideration.

Tracey Croughwell
Guest
Tracey Croughwell
5 years 9 months ago

When non-software companies use their internal IT staff to create a proprietary system, it often results in long delays and a big mess. Mobile payment systems are just not part of their core expertise. Leave it to the experts and work out a biz dev deal where they get something out of using it. As a consumer I wouldn’t trust a retailer with my privacy any more than Google.

Christopher P. Ramey
Guest
5 years 9 months ago

This is not about customers being confused; customers are already confused. However, each of the surviving players will create a seamless and effortless program for customers to use their mobile phones to purchase product. There is no path — the distribution channel for these services will be different than traditional credit card companies.

It’s easy to suggest that this is a play to disintermediate the banks to control credit card costs. However, we may want to consider that Walmart and Target start at exchange rates and negotiate downward; unlike most of the rest of retail world.

We’ve entered a seminal opportunistic period in technology; everyone desires control and power.

Gustavo Gomez
Guest
Gustavo Gomez
5 years 9 months ago

As in any new business, there will be a crowd before the dust settles and the strongest options survive. I don’t see consumers being confused for long (if at all) and some will take advantage of the opportunities that will surely develop as companies use promotions to build a following and create brand awareness and loyalty.

shane moon
Guest
shane moon
5 years 8 months ago
Confusion is guaranteed and the dust will need to settle with the leading ones taking charge. A mobile payment system will have to be simple, easy while multi-format. I cannot see retailers winning here, it seems like it could be a bit like loyalty mechanisms — 15 different key retailers that I frequent for everything I need so I now have 15 different mobile payment systems? In that environment, I believe most would default back to the lowest common denominator if this is the only outcome from mobile technology from retailers — bank card or credit card; thus the attraction of Google wallet – if it can get to the point of a ‘virtual wallet’ that carries everything too easy to tap and pick the right ‘virtual card’ kept in the wallet — security issues aside it will become accepted. Retailers/businesses may be better placed by collaborating on a system for their purpose, e.g. fashion retailers have one, sporting goods retailers have one, quick service foods, grocery and convenience…. Whatever the outcome, it’s exciting to… Read more »
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