Wal-Mart Stores, Inc. Goes After Apple in Mobile Payments (WMT)

The lumbering Walmart (WMT) going head-to-head against Apple (AAPL) in mobile payments sounds kind of goofy at first, but as the world’s largest retailer, WMT has a built-in advantage.

Wal-Mart Stores, Inc. Goes After Apple in Mobile Payments (WMT)WMT claims most of its millions upon millions of customers already use cash or debit cards. If mobile payments really do push cash and cards to the sidelines one day, an in-house Walmart Pay app makes sense.

Walmart already has a legion of loyal shoppers, affording the retailer a direct way to market the app — it just has convert a fraction of those folks to mobile payments, of which Walmart Pay will be their only option … at least at first.

Tellingly, WMT has left open the option of adding apps from Apple, Alphabet’s (GOOGGOOGL) Google and other players later. WMT also continues to work with other large retailers — from Target (TGT) to Best Buy (BBY) — to create yet another competing mobile payments system.

Walmart says it’s building its own mobile payments service because existing systems weren’t broad enough to suit their customers, according to The Wall Street Journal.

Other systems work only on particular smartphones and a limited selection of credit and debit cards. As Daniel Eckert, Walmart’s head of services for the U.S., told WSJ, “[Walmart Pay] allows customers to use any credit, debit, prepaid card, just as they would normally do if it were plastic.”

Walmart says about 75% of its customers have smartphones.

WMT Wants Part of a Hot Market

Not mentioned — but a likely benefit — is that by linking the app to customer accounts with payment cards on file at Walmart.com, Walmart Pay could help grow WMT’s online operations. That’s an area in which it is investing heavily.

Apple Pay is currently the favorite to succeed in mobile payments among a number of heavy hitters, including Google’s Android Pay, PayPal (PYPL), Facebook (FB), Twitter (TWTR) and Square (SQ). But as WMT shows, retailers are looking to take their places among those technology companies.

As well they should.

Cash, credit and debit card payments add up to about $13 trillion annually, and consumers are expected to make more than $140 billion in mobile payments by the end of the decade, according to Forrester, a market research and consulting firm.

Mobile payments are already growing at a strong pace — as much as 8% per year according to industry reports. If the technology catches on, that growth rate will surely accelerate.

Now Walmart just has to hope that mobile payments don’t become a flop. It’s possible that they’re an answer to a question no one asked. After all, it’s not difficult to pull cash or a card out of a wallet.

And of course, any effect on Walmart stock wouldn’t be felt for some time. For now, the story remains on Walmart’s struggle with rising costs and soft sales, especially overseas.

If you’re eyeing WMT stock, mobile payments shouldn’t be part of your equation.

As of this writing, Dan Burrows did not hold a position in any of the aforementioned securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2015/12/walmart-pay-stock-wmt/.

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