Wal-Mart adds to mobile wallet frenzy with 'Walmart Pay'

By Sruthi Ramakrishnan and Nandita Bose

(Reuters) - Wal-Mart Stores Inc launched its own mobile payment service Walmart Pay on Thursday, potentially dealing a sharp blow to the ambitions of a mobile wallet the company had been co-developing with a consortium of retailers.

The mobile payments space in the U.S. has seen a flurry of new launches and partnerships in the past year but has failed to gain traction as customer and merchant adoption have been sluggish.

CurrentC - whose developers included Wal-Mart, Target Corp and Best Buy Co Inc among others - was likely to prove strong competition to Apple Inc's Apple Pay because it was developed as a single payment solution that could be used at many retailers and integrate their loyalty programs.

But years of delay, a data breach and management changes hurt its prospects. An increasingly bigger worry for CurrentC is the end of its exclusive partnership with most of its members, which means they can now accept other mobile payment options at their stores.

Best Buy and Rite Aid already accept Apple Pay and Alphabet Inc's Android Pay. Target accepts Apple Pay in its mobile app and a company spokesman said it is exploring additional mobile wallet options without giving details.

A spokesman for CurrentC said that despite the launch of Walmart Pay, Wal-Mart, the world's largest retailer, continues to be a "strong and supportive partner" and they are working on a national launch of that service with the retailer as its partner.

A survey released by data firm InfoScout found Apple Pay use to be at its lowest rate since the firm started tracking it. Shoppers used it this past Black Friday for only 2.7 percent of eligible transactions.

"There has been a lot of hype and advertising in this space but there are no clear winners ... market share is still up for grabs," said Kevin Grieve, partner and head of the North American cards and payments practise at Strategy&, part of PricewaterhouseCoopers.

Walmart Pay, which will be a part of the retailer's mobile application, will be available on Apple and Android devices and allow payments with any major credit, debit, pre-paid or Walmart gift cards, the company said.

Walmart Pay requires customers to choose the payment option within the retailer's mobile app at a checkout counter, activate their phone camera and scan the code displayed at the register after which an e-receipt will be sent to the app.

Walmart Pay was introduced in select U.S. stores and is expected to be available nationwide by the first half of 2016. The service will also allow adding other payment options such as mobile wallets in the future.

(Reporting by Sruthi Ramakrishnan in Bengaluru and Nandita Bose in Chicago; Additional reporting by Subrat Patnaik in Bengaluru; Editing by Maju Samuel and Alan Crosby)