Walmart Pay vs. Apple Pay: Hardware age dictates all

Walmart Pay is about to go national, but why didn't it embrace NFC payments?

On Wednesday (July 6), Walmart announced that its trial of Walmart Pay would go national. This is good news for Walmart shoppers who want to pay with a mobile device, but the news would have been very different had Walmart instead embraced NFC payments. Walmart opted to go with its own payments system.

"There is something very powerful about the ease and simplicity of Walmart Pay," said Daniel Eckert, senior vice president of services at Walmart U.S., in a prepared statement. What Eckert didn't say, though, was what exactly Walmart Pay was easier and simpler than.

If we contrast Walmart Pay with two popular NFC options — Apple Pay and Android Pay — we come up with a lot of strengths and weaknesses. Whether Walmart Pay would be better for a specific shopper than, let's say, Apple Pay, depends on that shopper's handset.

How is Walmart Pay better?

It works on just about any Android or iOS smartphone or tablet, including much older devices. All it really needs is the ability to download apps — which is pretty much the entry-level definition of a smartphone — and a decent camera (to focus on the QR code). NFC approaches require the latest hardware from the few handset makers that support NFC. Most existing iPhones, for example, can't handle Apple Pay.

Walmart Pay also integrates electronic Walmart receipts into the app and allows them to be viewed at any time.

Before we go into the ways Walmart Pay is worse than NFC, let’s not dismiss how huge an advantage this hardware-agnostic difference is. Walmart's massive size and relatively low-cost merchandise means that it needs to be accessible to as many people as possible. This approach delivers that. If Walmart Pay gets to have only one major advantage, this is arguably the best one to have.

How is Walmart Pay worse?

It was odd that the Walmart Pay statement opted to stress "ease and simplicity," because those are both areas where it is a lot weaker than almost any of the common NFC options.

Let's compare the Walmart Pay experience with the Apple Pay experience. As long as the shopper is willing to use the default card in Apple Pay, all that the shopper need do is hold the phone right above the card reader and do a one-second finger scan. It doesn’t need to be connected to any network, nor does the shopper have to launch an app, key in a password or manipulate the app in any way.

Contrast that with Walmart Pay, which requires the shopper to find and then open the Walmart app, select Walmart Pay and then manually activate the camera and then scan a register QR code — which, as many shoppers will confirm, isn’t always that easy to do on the first or second attempt. Shoppers will also have to enter a PIN or, sometimes, do a finger scan.

Walmart Pay also can't be used for fuel, whereas NFC payment options have no product restrictions. Granted, other than Chevron, there aren't an awful lot of gas stations accepting Apple Pay, but there are some. Not with Walmart Pay.

And courtesy of Walmart's own Walmart Pay page, here are some restrictions for Walmart Pay that are generally also restrictions for most NFC wallets. "Digital coupons will not work. Paper coupons will have to be scanned as they are done today," Walmart said, adding that other current no-nos include cashback, loyalty/rewards and PayPal.

Walmart Pay also can't handle direct access to bank accounts. That's a reversal from the early Walmart mobile wallet plans, back when it still dreamt of using mobile wallets to sidestep, or at least sharply curtail, interchange fees.

Also, based on its initial trials, Walmart Pay anticipates enough QR code glitches that it published a plan for them. "What if the QR Code does not work? Enter the 803 Action Code to print out a QR code for the customer to scan with their phone. Discard this QR Code after the customer successfully scans it. It is only valid for one transaction," the public Walmart Pay page said. It's not clear how this helps, though. If the phone (operator error?) isn't playing well with a screen-displayed QR code, not seeing how a printed version would do better. But it's worth a shot.

Then there’s the big problem, which Walmart was attempting to avoid via the dearly departed CurrentC: Apple Pay works across a large number of merchants, but Walmart Pay only works at Walmart. That said, if the merchant is large enough — and certainly Walmart is — a single-merchant payment method can certainly be effective, as Starbucks has clearly proved.

If it works, it will not only drive a lot more of its customers to use the Walmart app, but it will in effect deliver to Walmart a CRM program, which it has never had. It will suddenly be able to associate specific purchases with specific shoppers. This will open the door to customer-specific offers and potentially differential pricing, albeit down the road.

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