Why Walmart is Trying to Get Into the Payments Business | Summary and Q&A

TL;DR

Walmart's CurrentC aims to cut out payment processors by connecting customers' bank accounts directly to Walmart, potentially driving down costs for consumers, but faces concerns over its use of QR codes and the need for an extra step in the payment process.

Key Insights

• 💇 Walmart's CurrentC aims to cut out payment processors to drive down costs for consumers.
• 👏 The use of QR codes in the CurrentC app introduces an extra step in the payment process, potentially hindering its convenience compared to NFC-based systems.
• 🤱 Walmart's significant revenue and focus on affordability make cutting out interchange fees a crucial strategic move for the company.
• ❓ The involvement of various merchants in the Merchant Customer Exchange highlights the potential for widespread disruption in the payments industry.
• 👾 Fintech companies are closely monitoring the payment space, indicating the industry's likelihood of further transformation.
• 😒 Concerns exist regarding the use of QR codes and the potential disabling of near field communications by merchants, which could impact the adoption of alternative payment methods.
• 🪚 Walmart's entry into the payments sector threatens the dominance of traditional payment processors like Visa, MasterCard, and American Express.

Transcript

Gaby Lapera: Whereas, CurrentC, which is the product created by Walmart that is still in beta test, I don't think you can get it unless you live in Columbus, Ohio -- I guess you can download it, but it's not going to do anything for you -- it's trying to cut out the payment processors entirely. Walmart and its little consortium decided that they we... Read More

Questions & Answers

Q: Why does Walmart want to cut out payment processors?

Walmart's goal is to drive down costs for its customers as it earns more than $400 billion in revenue, and interchange fees from payment processors like Visa and MasterCard can be significant expenses that Walmart aims to eliminate.

Q: How does the CurrentC payment system work?

CurrentC uses QR codes for payments, which requires users to pull up the code and take a picture, making it a less efficient and more cumbersome payment method than NFC-based systems like Apple Pay or Google Wallet.

Q: Will other merchants part of the Merchant Customer Exchange disable near field communications?

While it is not confirmed, there is a potential for other merchants to disable near field communications, similar to Walmart. This could impact the convenience of NFC-based payment methods like Apple Pay at these establishments.

Q: How does Walmart's CurrentC pose a disruption in the payments industry?

The CurrentC system represents an opportunity for disruption as it challenges traditional payment processors and offers a different payment experience. Many fintech companies are focusing on this space, suggesting that changes are likely to occur.

Summary & Key Takeaways

• Walmart's CurrentC aims to eliminate payment processors and connect customers' bank accounts directly to Walmart to save costs.

• Walmart's massive revenue and focus on offering low prices make cutting out interchange fees a fundamental part of its business strategy.

• Concerns arise over the use of QR codes in the CurrentC app, which adds an extra step to the payment process compared to other payment systems like Apple Pay and Google Wallet.