Why retailers want to take the wheel on mobile payments

When cellular carriers, banks, credit card companies, web giants and start-ups eye the opportunity in mobile payments, they imagine themselves making gobs of money by selling retailers on the merits of their technology. Turns out the retailers might have their own plans.

According to a report in the Wall Street Journal, Walmart (s wmt), Target (s tgt) and a couple dozen major retailers have decided to work on their own next-generation mobile payment system that will compete against the likes of Google Wallet (s goog), Isis, PayPal (s ebay) and many others. It could throw the nascent mobile payment market into even more chaos and make it harder for consumers to know which mobile wallet they’re supposed to carry in their pockets.

It’s unclear when the initiative would launch, how it will operate and how widely it would be deployed. But the companies involved, which include big-box retailers, fast food restaurants, drug stores and vending companies, have a combined annual revenue of $1.38 trillion, a huge pile of money that they would like to defend from the salivating technology and payment industries.

The report says that retailers have surveyed the first crop of mobile payment services and have found them wanting, specifically in regards to security. I think there may be some legitimate concerns about the payment players, but what this comes down to is a basic power play. The retailers are being increasingly hit up by Google, the carriers in the Isis joint venture, PayPal and other financial institutions trying to sell them a mobile way to pay. But retailers already have to deal with a lot of middlemen and aren’t crazy about potentially sharing revenue and data with outsiders. Google, for example, isn’t taking a cut of Google Wallet transactions but covets the payment data to better target users with deals.

Retailers think there’s a real opportunity to create a payments, discounts and loyalty platform built by the people who know their businesses the best: themselves. Instead of relying on another provider to come up with ways to attract, engage and retain consumers, they’d much rather develop that expertise in-house. That’s made possible by the fact that there are new ways to move some of the old payment structures onto the Internet, allowing companies like Square, Dwolla, PayPal or others to create next generation payment systems that don’t abide by the old rules and restrictions.

If start-ups can do it, the retailers are probably thinking they can too. I just wrote about LevelUp, which created their own barcode-based payment system from scratch last year.

A retailer payment system could still be funded through existing credit cards and debit cards, but it could keep them front and center. And it could be built on their terms: designed to increase loyalty, eschew a one-size-fits-all approach to their unique customers and avoid big upgrades to point-of-sale hardware. If the retailers came up with their own version of Square, PayPal or Starbucks’ (s sbux) system, they might be able to get away with a lighter payment system that they can control themselves.

Starbucks may be the model here for the retailers. The company recently said that Starbucks users loaded $500 million into mobile accounts in December alone and conducted more than 26 million mobile transactions last year. That’s money and data exclusive to Starbucks. And like Starbucks, if the retailers can build its own system, they can also choose to not support other wallets. That should be a concern for mobile payment players.

Much attention has focused on Verizon possibly holding back Google Wallet on the Galaxy Nexus as it waits for Isis, which it co-founded, to get underway. But the retailers are the ultimate gatekeeper here. They could come out with their own app-based system and then wait and see if they need to outsource. It’s also practical: with so many jockeying for mobile payments position, it’s hard to make an expensive bet.

But while retailers might be excited, it could just add more uncertainty for consumers, who are facing a mobile-payments marketing onslaught. And when consumers are confused by new technology, they avoid it. But if other large retailers can mimic Starbucks with popular apps and keep people interested with good deals and discounts, they’ll continue to own the customer.

Are these retailers serious? After all, this could just be a threat to get better deals or terms with the payment platforms. But I see a real potential for retailers to take this step. They’ve got a lot to gain and a lot to lose from a shift to mobile payments: why leave it in the hands of others?