Target May Launch Its Own Mobile Wallet Next Year

23 Dec 2015 | Author: | No comments yet »

Target May Launch Its Own Mobile Wallet Next Year.

Target may launch its own mobile wallet as soon as next year, according to a report out this morning from Reuters, citing unnamed sources. One week after the reveal of Walmart Pay, Walmart’s custom mobile payment solution, a new report claims that Target is working on its own wallet app. The move would put the fourth-largest U.S. retailer in direct competition with other payment platforms, including Apple Pay, Android Pay, and Samsung Pay, for example.

Companies that might not have considered mobile payments as a viable means to buy goods just a couple of years ago are turning things around in a big way, and now the number of options for users out there in the wild are getting higher and higher. Target’s mobile wallet service is described as being in the early stages of development with a possible launch possibly planned for sometime next year. From a record nearly $3 billion spent on Cyber Monday to kids making their Christmas lists on apps instead of crayon-and-paper for Santa , the 2015 holiday season has been increasingly mobile.

Target has reportedly partnered with credit card companies, and they are said to be leaning toward using QR codes that you would would bring up on your phone and scan at the payment terminal to pay for goods. What’s interesting about this report is that, like Walmart, Target is also a member of a retailer-backed consortium MCX which is developing a mobile wallet to compete with the likes of Apple Pay, called CurrentC.

Mobile retail apps have seen an increase in monthly visitors since their popularity has been tracked, according to digital analytics company comScore. While Target is certainly no stranger to Apple, with all the Apple Watch and iPad sales headlining during Black Friday this year, the retailer has resisted accepting Apple Pay for purchases in its stores since Apple’s wallet service launch in October 2014. That app has not yet launched, but has been criticized for being a clunky solution in comparison with the NFC-based tap-and-pay efforts from Apple, Google and others. In addition, during its beta, it hasn’t allowed users to pay with credit cards – instead only permitting payments with gift cards, store cards, or through a direct connection with a user’s bank account.

The most-used apps for major retailers during November 2015 were Amazon Mobile AMZN, -0.09% , Walmart WMT, +0.31% , eBay EBAY, -1.50% , Target’s TGT, -1.62% Cartwheel app and Starbucks SBUX, -1.00% . The report states that while Target has not begun any in-store tests of this new mobile payment option, which doesn’t even have a name yet, it could see a public launch sometime in 2016. Target is a major retail chain, so it’s not surprising that the company would want to get in on the mobile payment bandwagon, even as it skirts other viable options in development of its own option.

That’s certainly believable given that Target has already rolled out a suite of beautifully designed mobile applications that are also innovative from a technical perspective. And as shoppers have shown an affinity for the online and mobile shopping experience, retailers have scrambled to gain competitive edge, adding new features to their websites and apps, such as loyalty programs and advantages like the ability to place a complicated coffee order in advance. Both chip-in-pin and contactless payment support is critical for Target which was hit with a massive security breach in 2013, which prompted the retailer to promote the use of paper checks (of all things) at checkout. For example, Target’s mobile couponing app Cartwheel is a top 10 app on the App Store today, and sees heavy usage from consumers who tap to add items to their savings list then scan a barcode at checkout.

The company’s flagship app also introduced its own in-store item locator, and uses beacon technology to ping consumers about in-store deals, trends and recommendations. As a result, the shopper builds the habit of using the app, becoming familiar with its features and in some cases working toward rewards, like complimentary drinks and snacks for users of the Starbucks, Panera PNRA, +1.24% and McDonald’s MCD, -0.82% apps. “It makes a lot more sense to make a single-branded app in those scenarios, more so than apparel specialists you might go to once a quarter,” Evans said. Those services are also integrated into a user’s device, which means that they’ll likely be faster to use than a service like Walmart Pay or this rumored Target app.

Several other early CurrentC backers including Kohl’s, Best Buy, Chili’s, and Dunkin’ Donuts have adopted Apple Pay payments in either their stores, iPhone and iPad apps, or both. That makes it sound like the payments process could actually be integrated within Cartwheel, though the wallet has not actually moved to the point of testing, the articled notes. Plus, consumers are unlikely to commit to many apps, meaning they won’t download apps for stores they rarely visit, said Mark Ranta, the head of digital solutions at ACI Worldwide, an electronic banking and payment company.

The holiday season is a particularly good time to offer rewards and incentives, like Amazon promoting special deals exclusively available for app users, in hopes of getting customers to download the app and continue to use it throughout the year, said Ross Rubin, the senior director of industry analysis for App Annie, an analytics and market research company. A spokesperson said that the retailer will “continue to explore additional mobile wallet solutions, and will ultimately work to provide the best and most sought-after mobile wallet experiences for our guests.” Some retailers, including Wal-Mart and Target, are attempting to avoid those fees by creating their own mobile-payment system called CurrentC that would only allow customers to pay through their checking account and select merchant debit, merchant credit and gift cards, bypassing non-branded credit cards entirely. Because merchants are charged for the total amount spent and also for each transaction when customers use credit cards, they can shave off costs when customers pre-load a larger amount of money onto a gift card, then use that for future purchases.

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