Last week, Wal-Mart expanded their mobile payment service to now include seven US states.  While the app itself was launched in December 2015, it was only in a few select stores with the intent to launch nationwide in the first half of 2016.  In May Wal-Mart pushed their app to approximately 1,000 in Texas, Oklahoma, and Arkansas.  Now it has also become available in Mississippi, Georgia, Alabama, and Louisiana, and the first half of 2016 is quickly coming to a close.

Strategy Analytics’ Mobile Payments Service (MPS) had looked to undertake an expert evaluation of the payment app, supplemented by our unique consumer research which would provide insights into existing user behaviors, preferences, and unmet needs towards this app.  However, as the app has only reached a handful of states in the US, this research will look to be completed later in 2016.

While mobile payments adoption and frequency of use continues to rise (slowly but steadily) primarily driven by bigger players in the space, including Apple and Samsung, Wal-Mart is missing out on opportunities to capture a user base.  While Apple Pay, Android Pay, and Samsung Pay continue to gain users this delay in pushing out the app nationwide is causing two main problems for Wal-Mart Pay:

• Consumers who are adopting the aforementioned alternative payment apps will most likely be less inclined to want to switch between varying mobile payment apps as it can create confusion and frustration – ultimately removing the sense of efficiency which is a primary driver for consumers to adopt and use mobile payments.
• Our ongoing consumer research has shown that once a user has taken the time to setup and invested time in customizing an app such as a mobile payment service, they are again less inclined to adopt another.

The potential for Wal-Mart pay is currently in the hands of Wal-Mart.  Incentives to sign up and/or use a mobile payments service have been huge drivers for existing mobile payment services big and small – including for Apple Pay.  But Wal-Mart does not seem to be offering any type of incentive for users to sign up for their payment service, other than the standard convenience factor.  While there is no apparent incentive to sign up and use, the Wal-Mart mobile app (into which the Wal-Mart Pay function is integrated) does allow users to store digital copies of receipts, Wal-Mart gift cards, refill prescriptions from the pharmacy, and utilize a digital shopping list – all from within the same app.  These are all benefits already residing within the mobile Wal-Mart app, so regular users should definitely see notifications that Wal-Mart is available, once it does become available.

Also, while technology fragmentation has long been an ongoing barrier for widespread adoption of mobile payments, Starbucks has had enormous success (see Figure 1 below) with their independent mobile payment app, which uses the same technology as Wal-Mart Pay: QR codes.  We estimate that in 2015 customers spent almost $3 Billion in Starbucks using the Starbucks app, accounting for over 20% of all transactions in its US stores.

Figure 1: Starbucks Estimated Revenue via Mobile Payments

With Wal-Mart generating over $298 B in annual sales during its fiscal year ending January 2016 and its ability to integrate loyalty, coupons and other benefits into its mobile app, we believe Wal-Mart has strong potential to provide an alternative mobile payment platform to its loyal base of customers – but only if it can optimize the user experience.