Evan Schuman's StorefrontBacktalk

When Walmart last week released a handful of stats about its new Pay With Cash online program, one stat stood out. Namely, that 40 percent of everyone who used the cash-online program ended up paying with anything other than cash.

Why would almost half of the people who specifically are using a cash-only program end up using a payment card or check? Joel Anderson, chief executive of walmart.com, told speech attendees at the Internet Retailer Conference & Exhibition in Chicago an interesting theory: Those shoppers may be scared to use payment cards online. In mid-2012, could this be true? Here’s the bizarre part: For Anderson’s argument to work, we have to believe that there exist a lot of consumers (40 percent is huge) who are fearful enough of E-tailers in general (and walmart.com in particular) that they won’t give them their Visa card online, but who are not so fearful that they hesitate giving it to an associate at the store. Even though the payment data is stored in the exact same place.

To delve into this issue, we must first separate rational informed judgment with emotionalism and psychology. If consumers feel this way, we must understand that and be ready to deal with it, even if it makes little sense. Put this into the category of consumers who are moving away from credit cards and to debit cards, despite the fact—which they very well might not know—that credit cards (with zero liability) are light years safer for consumers than debit cards.

Why psychology? Even though online systems are generally more secure than in-store, typing the card digits into a faceless screen can feel unnerving. Who is really seeing this? Handing the physical card to an associate at the local Walmart doesn’t trigger those emotional cues. For many shoppers, it’s not an issue of which is safer. It’s an issue of which feels safer.

Another example of that psychology: Shoppers like sites that store their payment-card data because they don’t have to type it in. That’s not merely for convenience. For some shoppers, it makes them feel at risk every time they type it in. Even though, from an IT perspective, it’s a little bit riskier allowing your data to be retained and reused, it sidesteps the act of typing it in. Again: less secure, but it feels more secure.

Part of the reason why these beliefs are so strongly resisted among retailers—which is why discussing Walmart’s 40 percent figure is so important—is that retailers know far too much. Consumers don’t understand how card-data databases work, what PCI requires or anything else. They know how things feel to them, and we need to listen to that.

The 40 percent figure also challenges a popular theory about Walmart’s cash online program, namely that it will be overwhelmingly used by the unbanked or by teens or others who can’t get payment cards. But if 40 percent end up paying with a payment card or check, it’s hard to reconcile that with almost all of these people being unbanked.

A few other interesting stats that Anderson released:

• The cash online orders represented 2 percent of all Walmart online sales in the few weeks the program has been live.

  Walmart didn’t release any supporting numbers, so it’s hard to put that into specific context. That said, 2 percent of all online orders from Walmart? Regardless of the context, that is a staggeringly large figure.

• Nearly 30 percent of these pay-by-cash online shoppers are new to walmart.com.

  This is good news for Walmart on two counts. First, this proves the chain’s fear that some shoppers weren’t going online because they didn’t have payment cards or didn’t want to use them online. Second, any program that brings in this many new customers is a win.

  Without more specifics, of course, we don’t know what the raw numbers and, even more critically, were these existing Walmart store customers or were they entirely new to Walmart? The best way to use this program is to get products that your local store has sold out of. How much of that is going on? Alas, no Walmart stats were released to help us answer that question.

• Walmart’s online baskets are 50 percent larger when customers use Pay With Cash online.

  This is more good news, but it’s harder to figure out. Why would the ability to order without a payment card make the orders larger? Is the abandonment rate higher than expected? It’s an interesting stat, but we would love to hear more about why.

Although it doesn’t explain some of these mysteries, company spokesperson Shernaz Daver pointed out that Walmart’s payment profile is a bit unusual in-store, too. “The majority of our store transactions are paid for in cash or cash equivalent, including debit cards, and approximately 15 percent of transactions are paid in the form of credit,” she said.

I wish she hadn’t lumped together “cash” and “cash equivalent including debit cards.” Debit cards are a huge and growing segment of payment cards, while cash is slowing, along with checks. If Walmart splits those and releases figures that might shed some meaningful light on this. That all said, only 15 percent of consumers using credit is interesting. Wonder if Walmart considers its stored-value Moneycard package a cash equivalent?