Target is using a different mobile payments solution, Apple Pay, in its iPhone app. The dual strategy is the latest example of how the jockeying for control of mobile payments is causing a confusing landscape for consumers that could slow adoption.

“The dust has not settled on in-store mobile payment,” said Gary Schwartz,  president and CEO of Impact Mobile, Toronto. “MCX’s position is a good example of the power posturing in this emerging channel.

“It is doubtful that mobile consumers could be more confused with their checkout options,” he said.

“Ultimately, I feel that Apple Pay’s end-game is in cloud-base checkout. Target is steering tender to Apple in their app and ultimately there is more chance of finding Apple Pay on www.target.com in the near future than its bricks-and-mortar POS.”

Minimizing risk
A group of employees from Target’s headquarters in Minneapolis are testing the CurrentC app in a few dozen area stores.  No date has been set yet to roll it out to consumers.

Target does not currently offer Apple Pay in its stores.

“Target doesn’t currently offer NFC payment functionality in our stores, which is required for Apple Pay,” said Eddie Baeb, a Target spokesman. “Our current focus is on moving towards the acceptance of chip-enabled credit and debit cards in-store beginning early next year.”

While CurrentC announced this fall that its initial trials were beginning, no specific retailers were named.

CurrentC is expected to be rolled out nationwide next year.

The dual strategy – CurrentC in store and Apple Pay in apps – points to the challenges facing mass merchants who want to make sure they play a meaningful role in mobile payments .

The fact that Target does not accept Apple Pay in store is not likely to have a big impact on its Christmas sales.

“With the holiday shopping season upon us, retailers are hesitant to make any changes at the point of sale,” said Jordan McKee, senior analyst, mobile marketing and commerce strategies, with Boston-based Yankee Group. “Smart retailers will wait until after the holidays to make changes when transaction volumes subside and the risk of issues at the point of sale is lower.”

Streamlining mcommerce
However, including Apple Pay in its app makes a lot of sense because the solution can streamline completing a purchase.

“Target has leveraged Apple Pay in its app in effort to streamline the checkout process and increase conversations,” Mr. McKee said. “Given the friction that Apple Pay reduces in an in-app payment setting, its value proposition here for retailers is significantly stronger than at the point of sale.

“It’s doubtful supporting Apple Pay in one channel but not the other will lead to customer confusion,” he said. “Reaching for a credit card at during an in-store transaction is a significantly more entrenched behavior than reaching for one during an in-app transaction.”

Mass merchants recognized the potential of mobile payments a couple of years ago, which is why a handful of them, including Target, Walmart and Best Buy, banded together to form MCX, to develop a mobile payments solution.

Retaining control
Besides simply giving consumers a way to pay for purchases in stores, these retailers are hoping to hold onto control of the transactional data for their customers, information that marketers view as an important tool in optimizing their marketing strategies.

A number of merchants do not offer Apple Pay in their stores and it is not clear if this is because the MCX contract does not allow them to or because of another reason.

For example, Target does not have the contactless terminals in place that are needed to process NFC payments, which Apple Pay uses. CurrentC, in comparison, uses QR-code based payments that do not require the installation of new equipment.

However, CVS and Rite Aid recently turned off Apple Pay in their stores, presumably because they are members of MCS.

MCX has come under attack for terms in its contract that implements a fine for adopting a competing payments solution, although MCX has said members would not be fined.

“Large merchants are proceeding cautiously into the mobile payment space, and that’s to best expected,” said Mr. McKee. “The mobilization of payments has deep rooted implications for large merchants, and placing ill-guided bets can have negative financial and brand ramifications.

“Merchants have much to gain as the payments ecosystem trends mobile, and most are being quite tactful in their approach in effort not to squander the opportunity,” he said.

A busy year
Apple Pay appears to be quickly gaining steam, which means mass merchants may have to change their tune at some point and begin accepting the payments solution.

For example, Whole Foods reported 150,000 in Apple Pay transactions in the first 17 days.

If the positive trend continues, numerous retailers are likely to be giving Apple Pay a closer look next year

“Next year, more retailers will have implemented EMV terminals,” said Peter Olynick, card and payments practice lead at Carlisle Gallagher Consulting Group. “Many of those new terminals could also have NFC capabilities and we could start to see the increase in mobile payments.

“In addition, retailers are being cautious around introducing new payment methods around this time of year as no one wants to experience what Target went through last year,” he said.

“Merchants don’t care about mobile payments.  They care about sales.  When consumers are incented to shift their spend due to mobile payment benefits, other merchants will quickly fall in line.”

Final Take
Chantal Tode is senior editor on Mobile Commerce Daily, New York