CVS launches its mobile wallet; US market may face saturation with too many retailer apps

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CVS pharmacy chain has launched its very own mobile wallet CVS Pay which is integrated within CVS Pharmacy app. It is bundled with payment, prescription pickup and ExtraCare loyalty program services. It has been launched initially at Mid-Atlantic stores and will expand to rest of US by end of this year. It works through scanning a barcode or 5 digit number at in-store or drive through locations and payment is made from pre-loaded debit or credit card in the app. Signature authentication for the payment is done within app rather than at the terminal. It is functional on both Android and iOS platforms.

CVS has entered into mobile wallet segment at a swift pace due its Boston based innovation lab aiding application development. The brand previously partnered with IBM for utilizing cognitive computing technology Watson to assist pharmacists in understanding patient risk and averting medical emergencies for chronic disease patients. It shows that CVS intends to expand its business in modern healthcare segment. CVS Pay is likely to focus on improving customer engagement for the brand. Currently CVS does not support any other mobile wallet. This increases the opportunity for acceptance and usage of CVS Pay. The brand has introduced the wallet through its mobile application which effectively taps into its existing consumer base. It has close to 10,000 stores across United States and ranks 7^th largest globally. It has also incorporated loyalty program in the wallet which has 7 million existing members. This is anticipated to increase the frequency for repeat consumers. Consumer preferences in United States are inclined towards retailer oriented mobile wallets, which is expected to boost CVS Pay usage. Mobile payments have been popular in the market due to add-on loyalty programs and in-app payments. This trend is expected to drive the popularity of CVS Pay.

However, there are certain factors that might impact retailer mobile wallet adoption rate as a whole. The end of wallet consortium Merchant Customer Exchange (MCX) has increased fragmentation in US market. Retailers have been forced to build up their own mobile wallet after disruption of QR-code mobile wallet pilot initiative CurrentC app. This has resulted in too many retailer apps in the market which is likely to create saturation. Using individual mobile wallet for each retailer might increase friction among users who might revert back to traditional debit and credit card payment.

US in-store mobile payments volume is predicted to reach USD 84 billion by end of 2016. By 2020, it might go up to USD 563 billion.

To know more and gain deeper understanding of mobile payment industry in the United States, click here.