Walmart's Apple Pay reversal moves the card fight inside the phone wallet

The volume at stake belongs to card issuers, not to Walmart. Prashant Shah is vice president of product management at SoFi Tech Solutions. In an email to American Banker, he said that "If your card isn't the one the customer is actually using, you're losing spend and interchange to another issuer, even if that customer still keeps their checking account with you" ^[5]. He described where that ends for a bank that keeps the account and loses the card: "Over time, you can end up being where the paycheck lands, but not the card they reach for" ^[6].

Shah's switching figures price checkout convenience against rewards. He cited survey data showing 15% of consumers changed cards because a store or app made paying easier, and 21% switched to a card with better rewards ^[11], so easier paying moves about seven cards for every ten that better rewards move ^[18].

On the issuer side, the first step is a count. Tony DeSanctis, vice president at Cornerstone Advisors, told American Banker that banks should begin by measuring what percentage of their customer base uses their card in their digital wallet. Many banks do not take that step, he said, and vendor reports from a bank's payments processor can supply the number ^[10]. He also said "there's a generational lack of understanding of the ubiquity of mobile wallets in the younger generation" ^[9]. Community banks have largely neglected mobile wallet usage for years, and large banks have not been on top of it to the extent they should, he said ^[8].

Then the servicing work. A card that expires, is lost, or has to be reissued must be re-added by hand. Each of those events is another opportunity for a different card to become the default, according to Shah ^[13]. Louis Hoch, chief executive of the payments company Usio, said in an email that "Banks should look beyond whether their cards support mobile wallets and think about how well the experience actually works" ^[14]. Phil Bruno, chief strategy and growth officer at ACI Worldwide, described the operational load: "Someone gets a new phone or a replacement card, or loses their phone and needs to stop payments from it. The bank has to handle that without breaking anything else" ^[15]. With tokens, Bruno said, a bank can pause the card on a lost phone and keep the physical card working ^[16].

The strongest version of the merchant-wallet argument in the record comes from Ed Dean, vice president of product at Nuvei. He said in an email that "Even a retailer with the scale to promote its own payment experience has recognized the value of accepting the methods customers already use. Banks, merchants, and payment providers that fail to support those preferences risk losing transaction volume and everyday relevance" ^[3]. American Banker does not report Walmart's own wallet volumes, its acceptance costs, or an effective date for the Apple Pay support ^[19]. The explanation on offer comes from vendors and advisers. It can run two other ways: Walmart may have obtained terms it has not disclosed, or the growth in tap-to-pay ^[7] may have turned the holdout into lost baskets at the till before it was worth anything in acceptance cost. In my view the issuer response will be uneven, because the count DeSanctis names has not been run at many of the banks that need it ^[10]. Shah's line for the account side of it: "It's not enough to win the account; you have to keep winning the spend" ^[12].