Walmart, Target, 7-11 team up for mobile payment app

Krystal Peak · August 15, 2012 · Short URL:

Big retailers bet on mobile payment, get excited about the data you'll hand over willingly

As mobile payment pioneer Square continues to snap up big clients like Starbucks, a few huge retailers are teaming up to create a mobile payment network. Retailers including Walmart, Target, 7-11, and Sunoco are banding together, according to reports from the WSJ, to build the Merchant Customer Exchange and add another app to customers’ smartphones which would compete with other PayPal, Square, Intuit, and the dozens of other mobile payment services.

The group first started to make rumblings in March and now are setting their sights on the mobile payments ecosystem which could equate to more than $1 trillion annually -- that's a lot of swiping.

While this would result is some improved check-out and sale information for consumers, it looks like these businesses are really in it for the data. Mobile payment service not only provide more data and ease to the consumer but they create very complete and real-time update profiles of each user and allow retailers to really understand their shopper. Now combining dozens of retail locations would build and even more complete profile of each person and allow them to leverage it and sell more to them each time they walk into a partner location. 

This can also help the companies negotiate better credit card fees so that why are capturing more of the reenue rather than handing over to credit card providers, POS systems and other middlemen. 

“MCX will leverage mobile technology to give consumers a faster and more convenient shopping experience while eliminating unnecessary costs for all stakeholders,” Mike Cook, Wal-Mart’s corporate vice president and assistant treasurer, said in the statement.

The platform will be available to all kinds of merchants, including retail stores, casual restaurants and gas stations, Cook said.

This buzz is cropping up just as a $6.6 billion settlement between merchants and Visa and Mastercard over a lawsuit concerning credit card swipe fees. The settlement faces opposition from retail trade groups and individual retailers, including Wal-Mart and Target.

Credit-card swipe fees, which average about 2 percent of each transaction, generate about $40 billion a year for banks such as JPMorgan Chase, Bank of America and others. 

While I am a huge proponent in the mobile payment revolution, I do wonder what the critical mass is when it will just be commonplace to everywhere you walk into and when there will be a universal platform that lets you pay anywhere because I see there being a lot of confusion in coming months and years to remember who uses Square, PayPal, and others. As long as I don't need to lug around a wallet and a phone I am on board. 

The mobile payment revolution

Since so many people are talking about mobile payments, many are also expecting banks to grow their signature apps to include mobile payment options as well, but since there are so many of these individual apps, it will take some API adoption on the part of the banking app developers.

Cash is going to be a thing of the past if mobile and Web payments continue to work their way up the ladder in commerce. 

Research out this summer from Gartner says that this year will see more than $171.5 billion in mobile payment transactions. That's a whopping 60% increase on 2011′s $105.9 billion.  This means that 212.2 million people (up 32% from 160.5 million in 2011) are using some form of mobile payment service. 

And while the technology is out there to offer near-field-communication between smartphones and POS systems, it is Web transactions and SMS services that are making up the bulk of these digital transactions. 

Banks obviously want to be cut in on this rather than out.

Gartner sees digital mobile transactions reaching $617 billion by 2016 — but these factors in a slight slowing-down in growth to 42%.

SMS, Gartner research director Sandy Shen notes, is still the primary method used in making payments in developing markets, while in more developed markets, most transactions are made via mobile Internet portals. 

One API provider, WePay, just announced today that it is working to gain more adoption but not only lowering the fee it charges per transaction but also boosting its API so that retailers can accept payments more easily without building the infrastructure from the ground up. It seems like banks may be the next investors in mobile banking tech. In fact, I predict some banks will start snapping up promising mobile payment companies any month now. Just you watch.


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