Walmart banks on mobile payments, chip-and-PIN

Walmart (NYSE:WMT) is counting on mobile payments and chip-and-PIN cards to not only improve security of retail transactions, but also make it easier for consumers to buy products.

Reed Luhtanen, senior director for payments strategy at Walmart, Nancy O'Malley, chief payment system integrity officer for MasterCard, and Afzal Bari, Bloomberg government analyst, shared their views on payments and cybersecurity at the Merchant-Financial Cybersecurity Summit in Washington, D.C., on September 10.

While Walmart is not one of the early merchant partners with Apple Pay, the retailer recognizes the value of advancing mobile payments and mobile wallets through Apple Pay and other methods. "With mobile [payments], you can do so much more than you can do with a card; it is basically a supercomputer in your pocket," Luhtanen said. On the security side, the merchant "never has to see the personal data so no one has the chance to steal it from us," Luhtanen said.

O'Malley agrees that mobile payments can greatly improve payments security.

"When we talk to our customers about advances in security, we think that model is one of the most important opportunities to get it right that we've had in a long time," she said. Still, the industry has to recognize consumers' perception of security around Apple Pay and other mobile payments.

"We have to make sure they understand that it is safe. We are going to be delivering lots of answers over the course of the next few weeks," O'Malley said.

While consumers have been slow to adopt mobile payments so far, Apple Pay will help "push customers towards change."

"There is a higher probability that consumers will change their behavior toward mobile [and] retailers may benefit from overall consumer awareness," Bari said.

Even as mobile payments advance—and card breaches continue—card payments will continue to grow, according to Luhtanen. "We are not close to the point where people say, 'I'm not going to use cards anymore.' Card usage continues to increase in our stores, even [with] breaches," he said.

Plus, chip-and-PIN transactions make up more than five percent of transactions in Walmart stores, after the retailer installed chip-and-PIN terminals more than eight years ago. In addition, cash—including "millions of checks"—still makes up the largest number of transactions in Walmart stores, according to Luhtanen.

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