Shortly after Independence Day 2016, Wal-Mart Stores Inc. made its Walmart Pay application available for use in all of its 4,600-plus stores nationwide — a massive and rapid rollout, especially considering the app launched just last December. 

Walmart Pay — available on both Apple's iOS and Google's Android — enables consumers to purchase merchandise with their smartphones in Wal-Mart stores. Shoppers using Walmart Pay link their Walmart.com account to their payment method of choice — a bank account, pre-paid card, credit or debit card and/or Wal-Mart gift card and Savings Catcher balance (the latter a replacement for price-matching at some Wal-Mart stores that automatically refunds the difference between a Wal-Mart price and a lower one found at a competitor). The payment feature is just one aspect of Walmart's app, which also allows users to create or add to a shopping list using voice input or text or by scanning barcodes, check prices or product availability and locate items in store aisles.

Soon after announcing the completion of Walmart Pay’s nationwide rollout, Daniel Eckert, senior vice president of services for Wal-Mart U.S., noted that payments through the app increased 45% compared with the week before — not exactly a big surprise, considering the big bump in opportunity — and that 88% of transactions were coming from repeat users. Consumers were giving the app high marks, too: 82% recommended Walmart Pay and 75% awarded it five stars on app store ratings, according to Wal-Mart.

The Walmart app now boasts some 20 million active monthly users in all, according to materials supplied by a Wal-Mart spokesperson. (The retailer declined to comment on this story, except to refer to a press release as its official word on the app.) But dig deeper, and it’s not at all clear whether its Walmart Pay feature is a game-changer. It faces three significant challenges: a dearth of perks to boost usage, a tendency for shoppers to eschew retailer-specific apps light on reasons to use them regularly, and echoes of the same problems that doomed CurrentC, the stillborn payment app developed by a Wal-Mart-led group of retailers.

Wal-Mart is downplaying those challenges and banking mightily on the level of appreciation users have for the richer, more frictionless in-store checkout experience that Walmart Pay promises to deliver, says Vincent Alimi, vice president of product and innovation at mobile money solutions provider Mobeewave.

"It’s a smart strategy because of what’s in it for you, the customer," Alimi told Retail Dive. "The value proposition is that the checkout experience is seamless — no swipe, no signature, and you can redeem [loyalty] points.”

A paucity of perks

But WalMart Pay may need to go much further if it’s going to really gain traction, experts say. In fact, while its stated aim is smooth checkout, it's not all that easy. 

Walmart Pay competes with a range of mobile wallet apps including Apple Pay, Samsung Pay and Android Pay — solutions that leverage Near Field Communications short-range wireless connectivity protocols to process payments. Conversely, Wal-Mart shoppers must first open their Walmart mobile app, then select the Walmart Pay option and activate their smartphone's camera. At any time during checkout, the customer scans the QR code displayed at the store register to connect Walmart Pay; a Wal-Mart associate then scans and bags the items, and an e-receipt is sent to the app.

That’s more trouble than Apple Pay, not to mention much more to ask of people used to swiping credit cards. And that could be more trouble than it’s worth. 

Indeed, Walmart Pay is showing some fatigue a few months on. Even before the rollout was complete, just 5.5% of shoppers surveyed in May by 451 Research said they’d opt to use the app over the following 90 days. That compares with 17.8% planning to use coffeehouse chain Starbucks' popular mobile app, the standard against which in-store payments apps are frequently judged.

Then there's Target’s Cartwheel app, which also requires users to scan products using a smartphone camera, but rewards them with extra discounts on hundreds of items, and “unlocks” further opportunities to save based on frequency of use. Target continues to add Cartwheel features (as Wal-Mart will likely do to Walmart Pay), including the ability to access third-party coupons and personalized recommendations for discounts based on past purchases. The retailer is also testing points-based app rewards. 

As a result of Target's continued efforts, Cartwheel is the fifth most-popular U.S. retail app, as measured in 2015 iOS and Android downloads by mobile app analytics firm App Annie. More than 27 million users have downloaded Cartwheel since its 2013 launch, and shoppers have saved about $600 million through the app.

RSR Research analyst Nikki Baird singles out Cartwheel as an example of a retailer finally figuring out how to provide the level of personalization and glean the kind of data traditionally relegated to digital sales. “I think digital is teaching retailers how to be more targeted and personalized, but they still have to cross the chasm into stores,” she said in an email to Retail Dive earlier this year. “Target’s Cartwheel is getting them closer, as an example.”

While Cartwheel doesn’t currently include payment capabilities, many experts say that’s likely coming. Target's REDcard awards users a 5% discount on all purchases, and a mobile integration with that program could be particularly effective.

Walmart Pay does comparatively little of what Cartwheel does (at least in its present incarnation) beyond some price-matching, though it's likely collecting customer data. Wal-Mart does have some key advantages, however: As the country's (and the world's) largest brick-and-mortar retailer, scale is certainly on its side. But it’s an open question whether enough of Wal-Mart’s most loyal customers visit stores frequently enough, or use the Walmart app often enough: Wal-Mart's grocery offerings could mean that some nearby customers make multiple stops and spend several hundred dollars a week, but even that behavior won't necessarily translate to steady use of its app, says Scott Fitzgerald, marketing chief at global commerce services and payments company BlueSnap.

Contrast that with Starbucks and Dunkin Donuts app users who go in every day to get their coffee, a frequency that’s hard to match at other retailers. And Starbucks has piled on other app features, including loyalty and rewards as well as order-ahead capabilities, to cement its standing as customers' go-to caffeine supplier. 

Without the kinds of app-specific enticements found within the Starbucks and Dunkin Donuts apps (which have a pay feature) or even Cartwheel (which doesn't), consumer interest inevitably wanes.

“Loyalty and payments is about habit," Fitzgerald told Retail Dive. "If they can get folks in the habit of using Walmart Pay, that’ll make it sticky because they’ll have the ability to push all kinds of loyalty. There aren’t a lot of retailers that have the frequency or the scale where it would make sense.”

The specter of CurrentC

Walmart Pay expanded across Wal-Mart's U.S. store ranks just weeks following the last gasps of CurrentC, another QR code-based payment application the company spearheaded as the leader of the Merchant Consumer Exchange (MCX), a consortium of more than 50 retailers formed for the express purpose of developing a mobile payment system. After a series of launch delays, the MCX halted CurrentC's beta test in June, days after laying off 30 employees. 

“CurrentC was destined to fail,” said Mobeewave's Alimi, and the evidence certainly backs up that assertion. In its four years of development, CurrentC was contaminated by retailer priorities, like a desire to bypass credit card interchange fees instituted by card issuers like Visa and MasterCard — priorities that interfered with a focus on the customer experience. In addition, CurrentC wasn't ready when MCX said it would be — any of the times it said it would be. It also suffered a hack, not a devastating one, but its reputation took a severe hit.

MCX retailers further alienated customers by turning off their NFC systems to deny use of other payment apps, prompting Samsung Pay to add legacy capabilities making it compatible with older POS systems. Eventually (though perhaps not surprisingly), several MCX retailers turned their NFC terminals back on, reluctant to continue refusing a form of payment demanded by customers, but Wal-Mart was notably not among them, despite then-CFO Charles Holley making news in March 2015 when he told analysts that Wal-Mart may be open to accepting Apple Pay.

There haven't been any comments like that since, but we do know how CurrentC turned out: The writing was on the wall for that app once Wal-Mart developed its own mobile payment solution last year.

But will Walmart Pay maintain the same core philosophies that guided CurrentC? Possibly.

“At the simplest level, this is a really big retailer that has the ability to engender loyalty with their customers, and not a conspiracy” to shut out other payment apps, BlueSnap's Fitzgerald told Retail Dive. “There are the conspiracy theorists who say they’re lining up to take their second shot [after the failure of CurrentC]. The truth probably lies somewhere between the two.”

Wal-Mart does remain adamant about fighting credit card transaction fees. In a sign of how far it's willing to go in that arena, the retailer's Canadian unit has even shut off the acceptance of Visa cards in some stores. Yet it could solve that problem if Walmart Pay were linked to a checking account, something that would bypass the credit card companies altogether, Fitzgerald says. That again might take the addition of an incentive, which harks back to Walmart Pay’s need for beefier loyalty perks.

For now, Wal-Mart seems content to leverage its immense scale and the intense loyalty of its customer base to boost sales and promote shopper stickiness, but the ultimate success or failure of Walmart Pay likely hinges on a series of refinements and innovations that go well beyond the addition of mobile payment capabilities. Otherwise, there will come the day when even Wal-Mart, the last MCX retailer standing, finally turns on its NFC capacity and displays that iconic bitten-apple logo at checkout.

“I habitually go to Whole Foods, and if tomorrow Whole Foods announced an app, where all I needed to do was fund it from my checking account and they gave me a 5% discount, I’d do it tomorrow,” Fitzgerald said. “I think in the end for a lot of this stuff, the only place it becomes disruptive and interesting is when and if Wal-Mart doesn’t allow a credit card to be a funding source. Otherwise, nothing’s really changed.”