Key insights: Walmart is supporting Apple Pay after a long holdout, creating new opportunities for banks and payment companies. What's at stake: The move resulted from a shift in consumer preference for more digital options. Expert quote: "Even a retailer with the scale to promote its own payment experience has recognized the value of accepting the methods customers already use.
Banks, merchants, and payment providers that fail to support those preferences risk losing transaction volume and everyday relevance,"---Ed Dean, Nuvei. There is a broader urgency around immediate fund availability in consumers' day-to-day financial lives. Walmart's change of heart regarding Apple Pay and Google Pay acceptance is a major coup for mobile wallets.
For banks, it's also a wake-up call. Recent research from payments software company Nuvei found that 57% of respondents feel meaningful differences between payment methods and expect to find the one they prefer waiting for them. Mobile wallets are one of those payment methods, with more web-based and in-person businesses asking for Apple Pay and Google Pay, according to Eric Cohen, chief executive of Merchant Advocate, a merchant services consulting firm.
"Banks can't fight this movement," he told American Banker. Here are several lessons banks can glean from Walmart's latest move: Walmart's shift ultimately reflects consumer preference, Ed Dean, vice president of product at Nuvei, said in an email. "Even a retailer with the scale to promote its own payment experience has recognized the value of accepting the methods customers already use.
The financial technology company's transaction data reinforces the shift: tap-to-pay gained more share than any other payment method in the second quarter, and Walmart, the biggest holdout until now, will be a game-changer. "If your card isn't the one the customer is actually using, you're losing spend and interchange to another issuer, even if that customer still keeps their checking account with you," Shah said. "Over time, you can end up being where the paycheck lands, but not the card they reach for." Community banks have largely neglected mobile wallet usage for many years, and large banks also haven't been on top of things to the extent they should, Tony DeSanctis, vice president at Cornerstone Advisors, told American Banker.
In some cases, they aren't focused on payments. Also, "there's a generational lack of understanding of the ubiquity of mobile wallets in the younger generation," he said. A recent report from Worldpay found that digital wallets in the U.S. represent 40% of online transaction value and 17% of in-store point-of-sale value, underscoring where the trend is headed.
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