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Spoken of in hushed tones by merchants and retailers at payment conferences far and wide, "The Merchant Mobile Payment Alternative," a mobile payment scheme to compete with Google Wallet and Isis, had been the stuff of legend since it was first reported earlier this year. Lots of speculation but nothing definitive other than reports that a group of large retailers, including fierce competitors like Wal-Mart and Target, were dissatisfied with the mobile payment options on the market and were determined to band together to offer fellow merchants an alternative.
And today the myth became a reality, or at least it became more real in the sense that it's out in the open. Merchant Customer Exchange, a consortium of a dozen or so retailers, announced that it will roll out a mobile payment scheme for participating merchants to offer their customers. The new company said it will initially focus on providing merchants a mobile commerce solution that includes the ability to integrate offers and promotions.
The roll of merchants involved with MCX is a who's who of big retail brands, from convenience to specialty to big box retailers. Merchants include Best Buy, Target, Wal-Mart, Lowe's, Sears, Shell Oil, 7-Eleven and CVS. Together, the participating retailers represent approximately $1 trillion in annual sales.
"MCX will leverage mobile technology to give consumers a faster and more convenient shopping experience while eliminating unnecessary costs for all stakeholders," said Mike Cook, corporate vice president and assistant treasurer, Wal-Mart. "The MCX platform will employ secure technology to deliver an efficiency-enhancing mobile solution available to all merchant categories, including retail stores, casual dining, petroleum and e-commerce."
The announcement is relatively short on details. There's no mention of financial services partners, card brands, card issuers or technology partners working with MCX.
The announcment also fails to mention exactly how payments will be effected at the point of sale. It's most likely (and confirmed by the few sources familiar with the effort) that the product eventually offered by MCX will include a mobile wallet that is similar to Google Wallet and powered by NFC technologies. Consumers will be able to load payment accounts into the wallet. Merchants will be able to send offers and promotions to users. Payment will consist of a tap on an enabled POS terminal at the register. The company's new website only says:
"Development of the mobile application is underway, with an initial focus on a flexible solution that will offer merchants a customizable platform with the features and functionality needed to best meet consumers' needs. The application will be available through virtually any smartphone."
The MCX website said the company will release more information about additional merchants and product details in the next few weeks and months.
If you want a job done right
While specifics are limited, there is little doubt that MCX is a response by merchants unhappy with the way mobile payments is shaping up.
"We believe MCX is uniquely qualified to offer the most comprehensive mobile payment options for consumers," said Terry Scully, president of financial and retail services for Target, in the announcement. "By participating in MCX, merchants are in a position to effectively deliver innovative payment approaches that aren't available today."
The observation that innovative payment approaches using mobile devices aren't available today can only be seen as a criticism of current mobile payment providers like Google Wallet, Isis and PayPal.
Google Wallet, which has seen modest adoption by both consumers and merchants, recently went through a "reboot" to allow access to any credit card in a bid to spur interest. Isis, the NFC mobile payment joint venture between AT&T Mobility, T-Mobile USA and Verizon Wireless, has been slow to launch since it was first announced in November, 2010. It is rumored to be starting up pilot programs in Austin and Salt Lake City this month. PayPal's offline payment strategy is limited to a handful of retailers at the moment.
The issue for many merchants participating in MCX is that the other mobile payment offerings invite new players into their relationship with customers. In the case of Google Wallet, Google has access to consumers' behaviors. With Isis, mobile network operators join the payment relationship. In every case, the new players get customer data that they can then leverage however they want.
"As merchants, no one understands our customers' shopping and payment experience better than we do, and we're confident that together we can develop a technology solution that makes that experience more engaging, convenient and efficient," said Mark Williams, president of financial services, Best Buy, in a statement.
A rising tide lifts all boats
Regardless of how a new competitor will contend with existing mobile payment providers, the announcement of a new entrant, coming as it does on the heels of Sqaure's partnership with Starbucks last week, is good news for the burgeoning market.
"With competition comes acceleration," said Einar Rosenberg, head of Narian Technologies and a veteran observer of mobile payments. "Just like Google Wallet accelerated Isis, this joint venture will accelerate both Google Wallet and Isis."
Additionally, Rosenberg said the addition of another company using NFC at the point of sale only adds to the likelihood that it will take off as a payment-enabling technology. Many of the participants in MCX already have the ability to accept both Google Wallet and Isis using existing NFC-ready POS terminals, Rosenberg said. A new mobile payment method just means more opportunity for those terminals to be put to use.
"We have a few hundred thousand locations that accept NFC today, and growing rapidly," Rosenberg said. "This only makes the case stronger and speeds things faster."
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