Wal-Mart To Launch New Mobile Pay System In 2016

Wal-Mart is launching a new mobile pay system, allowing customers to use their smartphones to pay for purchases with credit, debit, prepaid or gift cards.

The service will be available in select stores this month, and across the country next year, the retail giant says.

With Wal-Mart Pay, the company is entering a crowded field of mobile payment providers — including Apple Pay, Android Pay and Samsung Pay. None of them has achieved widespread use. Changing consumer behavior has proven to be a challenge, as The New York Times reports:

"Both Apple and Google have found that persuading shoppers to switch from using physical credit cards or cash is tough. A survey released by the consumer data firm InfoScout found Apple Pay use to be at its lowest rate since the firm started tracking its usage. Shoppers used it this past Black Friday for only 2.7 percent of eligible transactions."

Apple Pay and Android Pay both rely on near-field communication, or NFC, a wireless technology that many cash registers aren't equipped with.

Samsung's system uses NFC as well but also has a backup system, The Associated Press reports: " The phone can mimic the old-school magnetic signals produced by card swipes and work with most existing equipment."

Wal-Mart Pay will go a different route. To check out, a user will call up the app, open the camera and scan a code that's presented on the credit card terminal.

The service will be built into Wal-Mart's existing app, which the company says has 22 million users each month.

While the Apple, Android and Samsung pay systems are limited to specific devices — by operating system for Apple and Android, and by manufacturer for Samsung — the Wal-Mart service will work on any smartphone that can download Wal-Mart's app.

Wal-Mart also notes that Wal-Mart Pay will "accept almost any payment type" — including prepaid debit cards, which have limited or no support on most mobile pay systems.

That continues a decade-long trend: As Wal-Mart has expanded its financial services, including bill pay, check cashing, a prepaid debit card called the MoneyCard, low-cost checking accounts and money transfers, it has often targeted low-income shoppers who may not have access to a debit card, a credit card or other conventional banking services.

The retailer has also indicated it might eventually integrate apps like Apple Pay or Android Pay directly into the Wal-Mart Pay system.

But the newly announced program might be bad news for another system, the AP reports. A consortium of retailers and restaurants — including Wal-Mart — has been trying to create a mobile payment system that works at all participating vendors. "CurrentC" has been in the works for three years but still hasn't been rolled out to consumers, and now Wal-Mart is going it alone. (Executives tell AP that they are still "excited" about the prospect of CurrentC.)

Security is always a concern for new payment methods, but the AP notes that all forms of mobile payment offer at least one security benefit:

"They store and transmit an alternate card number that's generated by the card issuer. The merchant never gets the real card number, so it remains safe even if the store's system gets hacked. With Wal-Mart Pay, the company says no card information is stored on the phone, but the real card number is still stored at what it says is a secure data center."