Dive Brief:

• Target will bring payment capabilities to at least one of its mobile applications some time this year, Chief Information and Digital Officer Michael McNamara told Recode at last week's NRF Big Show 2017. A Target spokesperson confirmed the news to Retail Dive but declined to provide additional details.

• McNamara told Recode that offering a way for shoppers to pay and use a mobile coupon “would make sense,” a comment suggesting that payment features would be added to Target's popular Cartwheel app, which communicates with customers in store, offering exclusive discounts and integrating third-party coupons. He also said that, at least at first, mobile payment would be exclusive to customers signed up for Target's REDcard, a store-branded debit or credit card that gives users 5% off all purchases and free shipping on all online purchases.

• Target currently accepts Apple Pay and Android Pay online, but not in stores. It previously participated in the retailer consortium that backed development of CurrentC, a mobile payment application that failed to launch.

Dive Insight:

Mobile payment remains in a state of subdued growth as most consumers — whether troubled by security and privacy concerns, or simply loathe to change habits — have largely stuck with their top-of-wallet plastic credit cards. 

That slow adoption comes despite significant benefits to consumers, including convenience, card-less and paperless payment options, and handy couponing, says Maya Mikhailov, CMO and co-founder of mobility solutions platform GPShopper. Moreover, retailers have compelling reasons to convince customers to pay with their apps.

“For retailers, it opens up a wealth of data that can be used to personalize the in-store experience using the mobile app as the focus,” Mikhailov told Retail Dive in email. “This one-stop-shop approach allows the retailer to tailor promotions and content to an in-store shopper in a more effective manner. There are no obvious downsides.”

Buzz and speculation about specifics of the so-called Target Pay app were rampant after Recode’s report, with many noting that mobile payment had lost priority for the retailer, which has shaken up its tech team in recent months. But Scott Fitzgerald, marketing chief at global commerce services and payments company BlueSnap, says that the traction Target has seen with its Cartwheel app in particular bodes well for adoption of a mobile payment solution.

Fitzgerald compared Target’s prospects to coffeehouse giant Starbucks, which has bucked trends and nurtured frequent and heavy use of its own payments app.“‘Target Pay’ feels like a fast-follower move,” he told Retail Dive in an email. “They have great leverage with their customers to have the same level of success that we have seen with Starbucks because they have already fostered a loyal user base. Their historical customer programs (e.g. REDcard) have been well conceived, promoted and adopted. I expect that they could use the success of Cartwheel to drive TargetPay adoption (e.g. — extra bonus on your coupons if you pay using Target Pay). I like their chances of getting this right because they already have the offers/incentives right, and now simply need to add payment. That was the same process that Starbucks had — rewards first, payments second.”