Target keeps mobile pay in-house, but for how long?

After nearly two years since the news broke of its plans to launch its own digital wallet, Target has finally launched Target Wallet, joining the myriad retailers that have gone with their own proprietary mobile payment solution.

Describing the launch of Target Wallet as new may be something of a stretch since it’s essentially an augmentation of the pre-existing Cartwheel digital coupons and discounts feature in its app, with payments now embedded into the coupon redemption capability. Target is in the midst of a major project to combine the Cartwheel app with the main Target mobile app.

Target Wallet is also somewhat restrictive in its payment options since payments can only be made using Target’s own REDcard.

The solution is “four times faster than other payment types,” according to Target, though that refers to other payment types available in Target since the retailer has been a holdout against comparably fast NFC payments from Apple Pay and Android Pay, a reluctance that dates to Target's membership in the now defunct MCX, a merchant-led mobile payment consortium.

Christopher Dilts/Bloomberg

This walled garden approach to mobile payments may have some benefits in driving Target customers to use the app.

But, as with Walmart and other retailers that still shun third-party digital wallets, this strategy may need to adjust accordingly if and when Apple and Android Pay scale to a point where they are the defacto preference for consumers. On the other hand, Target’s strategy ensures that the retailer gets holistic control of the customer experience and, more importantly, can track purchase activity without customer credentials being obfuscated by third-party tokenization.

Target, like Walmart, probably has a sufficiently broad and loyal customer base to make the provision of a standalone mobile payment platform viable. However, allowing other types of payments beyond REDcard within the wallet may be required in order to gain more widespread traction.