Wal-Mart Stores Inc. has a good feel for the basics it wants in a mobile payment system.
As chief financial officer, Charles Holley explained to investors this month that convenience for the customer is a priority. So, too, are safety and security. Eliminating cost is also important to the world's largest retailer.
Beyond that, though, Wal-Mart is still evaluating its options.
"I think it is shifting toward mobile pay. It's just not clear exactly where it's shifting," Holley told investors at the Bank of America Merrill Lynch 2015 Consumer and Retail Conference. "We need to make sure we're prepared to be on the leading edge of that when it happens."
Wal-Mart is part of a 50-retailer consortium called the Merchant Customer Exchange. A mobile payment product, CurrentC, is being developed by the exchange. Mobile payments are made through applications on devices such as smartphones or tablets and allow the user to connect with their bank account or credit card.
CurrentC currently is in a private pilot phase. There is no firm timetable on when it will be available in retailers, and the testing program is not being carried out in any Wal-Mart stores.
"We expect to launch an early-stage version of the CurrentC app in mid-2015, in a local market, to help us develop and enhance functionality and user experience," Merchant Customer Exchange said in a statement. "The local market will be determined based on a number of factors, including retail support, infrastructure and consumer population."
Mobile pay is only part of the product being developed for retailers. There is also a customer loyalty program component, although Wal-Mart does not currently offer that to its customers.
Merchant Customer Exchange is working to build a platform that works across multiple retailers, a challenge that slows the process. Retailers are reluctant to adopt existing options for a couple of reasons, including the customer data that technology companies would have access to and the fees associated with payment plans that are facilitated through credit card companies.
Retailers such as Wal-Mart don't want to be responsible for paying additional fees, something other services would require.
Creating a system that combines all the wishes of retailers across grocery, fuel, pharmacy, dining and other categories is taking time. And in a quickly moving world, the longer it takes the more time customers have to be exposed to other mobile pay products available from Apple, Google, PayPal and others.
"I think they're running out of time," Gil Luria, research analyst for Wedbush Securities Inc., said of CurrentC. "If they don't get a good solution out this year, with the other options that are out there, there will be less opportunity get customer attention. This really needs to be the year."
Infrastructure upgrades and overhauls to software and hardware also make the conversion tricky for retailers. There are a lot of things to consider before companies are willing to choose a single mobile payment option.
Consumer privacy and fraud protection are among the big concerns for retailers. MCX said it is addressing privacy concerns by storing financial data on a "secure cloud-hosted network." That helps prevent data from being accessed if a mobile device is hacked or stolen.
CurrentC also uses a QR code that it says offers "the best security layer to facilitate transactions instead of constantly passing the data between the user, merchant and financial institution."
Industry observers also think it is possible that Wal-Mart will adopt its own system separate from other retailers. Holley acknowledged that the end result might be a "combination" of existing options and those in development.
"It's a little bit like the Wild West at this point as various platforms jockey for position and as data breaches and fraud concerns make consumers skittish," said Carol Spieckerman, president of retail strategy firm newmarketbuilders. "If past history is any indicator, Wal-Mart may very well create and promote its own mobile payment solution to the exclusion of others once it better understands the requirements. Either way, Wal-Mart will once again be in a position to build a bridge to digital innovation for millions of customers who might otherwise take a pass."
Wal-Mart estimates that about 65 percent of its customers use smartphones. Those numbers are likely growing and that makes finding a mobile payment option a priority for the company and its nearly 4,500 stores in the United States. Eliminating the need for cash, checks or credit cards could conceivably make checking out easier for shoppers.
"[Mobile] is definitely where the future is going for our customer," Holley said. "How it all plays out, I don't think anybody knows yet. We do know it's going to be mobile."
SundayMonday Business on 03/15/2015