Walmart Banking That Agreement to Offer Chase Pay Will Lower Costs, Benefit Consumers

Although the American public has been quick to adapt to many high-tech trends from smartphones to online video streaming, one daily activity hasn't completely embraced progress.

When it comes to bricks-and-mortar shopping, Americans still favor cash and cards.

But on Thursday, Walmart (WMT) announced that it would introduce another way to pay in its stores using JPMorgan Chase's Chase Pay through the Walmart app and website. That includes the Walmart Pay mobile service that is available in stores. Walmart shares were roughly flat in Thursday trading.

Retailers want consumers to start using mobile wallet payment systems because they can cut credit card costs, such as those that drove Costco to abandon its long relationship with American Express. Mobile payment systems can also help stores implement customer loyalty programs. Starbucks has seen success with this tactic.

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In 2012, Walmart, along with several other major retailers including Target and CVS Health established a mobile pay consortium called Merchant Customer Exchange. The main goal of the project was to halt the rise of Apple Pay.

However, the consortium has proven largely unsuccessful, owing partly to disagreements among the member companies about the technology itself.

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This year, Walmart introduced its own mobile wallet solution, Walmart Pay. This app allows customers to pay using bank accounts that are synced with a Walmart Pay account.

Under the new agreement with JPMorgan Chase, the bank's mobile payment tool, Chase Pay, will become an option in the Walmart Pay app. Chase has been entering into agreements with retailers for its Chase Pay option, including Starbucks and Best Buy.

Chase Pay will appear in the Walmart Pay app early next year, but the companies aren't expecting it to catch on too quickly. On Thursday, Kevin Watters, JPMorgan's CEO for cards, said that mobile wallet systems will account for less than 1% of transactions "for a while."

Even if it takes a while, mobile payments will only grow in usage. And Walmart is smart to enter this arena before the big switch from plastic to digital cards occurs.

If you're looking for a retailer that still operates largely in the bricks-and-mortar sector (although with a growing e-commerce presence), you could do worse than Walmart. While other big-box stores fall by the wayside, Walmart has been able to navigate the changing retail landscape. Continue to watch this company and buy shares for the long term on any dip in price.

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The author is an independent contributor who at the time of publication owned none of the stocks mentioned.

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