Wal-Mart testing mobile payment system in U.S.

The mobile payment wars are heating up.

Wal-Mart Stores Inc., the world's largest retailer, said it's testing its own mobile payment system that will allow shoppers to pay with any major credit or debit card or its own store gift card through its app at the cash register.

It will start testing the new payment system Thursday at its stores in the Bentonville, Arkansas area, where the retailer is based. It plans to launch the payment feature in all 4,500-plus U.S. stores in the first half of next year.

It could be a lot longer before Canadians can enjoy the same convenience. A Wal-Mart spokeswoman said there are no plans to roll out the system outside the U.S. at this time.

While some stores like Starbucks or Dunkin' Donuts allow customers to pay with gift cards, Wal-Mart says it will become the first retailer to launch its own mobile payment system that works with an iPhone or Android device — and with a major credit or debit card.

It's part of an overall mobile strategy to making shopping easier and faster, and it's the latest feature to be added to its mobile app. But the move is the latest salvo in the battle for mobile payments that's in the early stages. Retailers, financial institutions and hardware makers are all trying to get a piece of what could be a very lucrative business.

Building its own system

Wal-Mart has moved into this field as Apple's one-year-old tap-and-pay system is being expanded to other merchants like Best Buy and KFC in the U.S. and comes several months after Google launched the Android Pay mobile wallet app and Samsung came out with Samsung Pay.

In Canada, Apple Pay is available only for Amex cardholders and Samsung Pay has yet to arrive.

The move signals that Wal-Mart believes it's best to build its own system to better serve its customers, even as it backs an industry-wide mobile payment program that it's testing with 10 other major retailers.

"We are creating a seamless shopping experience that includes payment," Neil Ashe, president and CEO of Wal-Mart's global eCommerce, told reporters on a conference call. "It's fast. It's simple, and it's a secure way for customers to use their smartphone."

Twenty-two million customers use the Wal-Mart app each month, and more than half of Wal-Mart's online orders are now coming from a mobile device. This holiday season, Wal-Mart added new features like allowing online shoppers to check in once they got to the parking lot so they could have their online orders ready for pickup.

Works with other platforms

Wal-Mart executives said that after evaluating various mobile options, they found that they had different constraints, working only on certain devices or payment types. Apple Pay requires iPhones. But Google's own tap-and-pay services, Android Pay and Samsung's Samsung Pay require Android phones.

However, Ashe and Daniel Eckert, Wal-Mart's senior vice-president of services, told reporters the system is designed to integrate with other payment applications like Apple Pay — if the retailer decides to include them. They also said they were excited about being in a pilot program called Merchant Customer Exchange that also includes such retailers as Target. The test for the system, which is called "CurrentC," is being conducted in Columbus, Ohio.

"We are listening to the needs of the customer," said Eckert. "We are looking at innovating the checkout experience and using payment to do that."

Wal-Mart's new mobile payment systems works this way: Shoppers download the Walmart app at the cash register and then choose Wal-Mart Pay. Then they activate the camera on the app to scan the QR code on the reader after the first item is scanned by the cashier. Customers can put the phone away and an e-receipt application will be sent to the app.

Mobile-payment services from Apple, Google and Samsung all rely on wireless technology called NFC. The customer merely taps the phone next to a payment machine at the store and authorizes the purchase, usually with a fingerprint ID. But it works only in stores with newer, NFC equipment. Samsung goes further in offering a backup: The phone can mimic the old-school magnetic signals produced by card swipes and work with most existing equipment.