Wal-Mart Pay threatens to surpass Apple in U.S. mobile payments

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Wal-Mart Stores’s app is close to surpassing Apple Pay in usage for mobile payments in the U.S., giving the world’s largest retailer even more clout as a growing number of people shop with their smartphones.

Available in 4,774 stores, Wal-Mart Pay is enrolling tens of thousands of new users a day, up from thousands four or five months ago, said Daniel Eckert, who runs the business. Two-thirds of the customers who try it also use it a second time within 21 days, he said, giving him confidence Wal-Mart Pay will surpass Apple Pay in the U.S. in terms of use by shoppers in stores where they’re accepted.

“If daily enrollments don’t slow down, I think that’s pretty well in the cards shortly,” said Eckert, senior vice president for services and digital acceleration. “I would have to imagine we are getting pretty close.”

Richard Crone, chief executive officer of researcher Crone Consulting, estimates Wal-Mart will pass Apple Pay in active U.S. users — those making at least two transactions a month — by the end of 2018.

Wal-Mart is the biggest retailer rejecting Apple Pay. Since it rolled out in 2014, Apple has been able to dictate its terms to retailers and banks eager to adopt it. Best Buy, Macy’s and Walgreens Boots Alliance are among the retailers that accept it.

Wal-Mart Pay was unveiled in December 2015, more than a year after Apple’s service debuted. The Bentonville, Ark.-based retailer resisted the lure of Apple in favor of its own offering — and it’s paid off.

Months after Wal-Mart Pay’s debut, the retailer held discussions with Apple about incorporating Apple Pay into the app, according to people familiar with the matter. The talks continued until March of 2016, ending without a deal due to the difficulty of blending the technology underpinning each company’s approach, said one of the people, who asked not to be identified as the discussions were private.

“As the world’s largest retailer, you can imagine that we have conversations with a variety of companies about products and services that we think would be of interest to our customers, and Apple, as big of a company as they are, is one of those companies,” Wal-Mart said. Apple declined to comment.

Both companies are pursuing a $49 billion market for mobile payments that’s been slow to develop in the U.S. Many consumers still worry about mobile payments’ security, and find that using a plastic card is often as fast and easy as pulling out their phone to pay. Like many retailers, Wal-Mart still doesn’t accept the wireless payment technology built in to mobile phones, stymieing Apple’s efforts. Instead, Wal-Mart Pay scans a code on the phone to complete a transaction.

Wal-Mart, in control of its own destiny and stores, has been able to train its associates and customers to use Wal-Mart Pay. It’s promoted the service consistently in stores and online. Unlike Apple Pay, which only works with Apple’s devices, Wal-Mart Pay works with both iOS and Android phones — a feature that hastened adoption.

“They flawlessly deployed the system, and it works,” Crone said. Wal-Mart Pay also incorporates in-store offers, promotions, rewards and gift-card balances all in one place, making it convenient for users, he said.

Wal-Mart began narrowing Apple’s lead earlier this year. Some 5.1 percent of Wal-Mart shoppers said they used Wal-Mart Pay in June, compared with 5.5 percent of iPhone users at stores that accept Apple Pay, which launched more than a year earlier, according to a survey by Pymnts.com and InfoScout. Wal-Mart Pay’s rate of adoption is higher than Samsung Pay and Android Pay combined, the survey found.

“Apple Pay’s road is much more difficult than Wal-Mart’s is,” Brendan Miller, an analyst at Forrester Research, said in a phone interview. “It means that Wal-Mart can make quicker changes, they can move faster in many respects than Apple Pay.” Forrester’s survey of 58,000 online consumers in the first half of 2017 found that 7 percent of them used Apple Pay in the past three months, while 6 percent used Wal-Mart Pay.

Wal-Mart is more interested in competing with Amazon.com Inc. than Apple. Earlier this year, Amazon acquired Whole Foods to hasten its expansion into the grocery market, and last year it debuted Amazon Go, an employee store in Seattle where no checkout is required. All purchases are automatically tracked with an app — likely a preview of Amazon’s stores of the future.

Apple has helped other retailers prepare to more effectively compete with Amazon. In October, Apple said that retailers like Safeway will be rolling out its mobile-payment service. Starbucks Corp., which has deployed the first successful retail mobile-payment app, uses Apple Pay as well. Over the past year, active users have more than doubled, and annual transactions are up 330 percent, Apple executives said during Nov. 2 earnings call.

Wal-Mart, for its part, has a “roadmap that continues as long as my arm,” Eckert said.