Some of the largest retailers in the United States have established a mobile payments group, the Merchant Customer Exchange (MCX). My view: The retailers want to their its hands on more customer data and will further muddy the already confusing mobile payment waters.
The Wall Street Journal broke the story today, but the publication first reported it in March without many details. There still aren't many details, but the group's members include Best Buy Co., Darden Restaurants Inc. (which owns Olive Garden and Red Lobster), Lowe's Cos., Royal Dutch Shell, Sears Holdings Corp., 7-Eleven Inc., Target Corp., Sunoco Inc., CVS Pharmacy, and Wal-Mart Stores Inc. The 15 member companies generate about $1 trillion of combined revenue and serve almost everyone who has a smartphone in the US, MSX says.
The MCX's barebones Website says other merchants and additional details will be announced "in the weeks and months ahead."
Why was the group established? Its Website says:
[The MCX was formed] with a singular purpose: offering consumers a customer-focused, versatile and seamlessly integrated mobile-commerce platform.
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.
That doesn't say much!
I assume the group was established because its members have looked at competing mobile payments initiatives, such as Google Wallet and Isis, and they believe they can do better for themselves and their customers. The companies want to obtain as much customer information as possible without having to beg Google Wallet, Isis, and other mobile payment ventures for the crumbs of data they might deign to share. Also, the enormous purchasing power of MCX members might enable them to cut better deals with transaction processors, such as MasterCard and Visa, than going through the mobile payment initiatives.
For consumers, MCX members might be able to provide special deals, discounts, loyalty points, and other services, and it might be easier to integrate these offerings without working with other mobile payment firms.
However, mobile payments are complicated, and this group might face the same problems as the other initiatives, which are not standing still. Look at what happened in just the past five months:
- Starbucks said it will invest $25 million in Square and use the mobile payments company for processing credit and debit cards.
- Google said its Wallet service will employ cloud services to allow the use of credit cards from American Express, Discover, MasterCard, and Visa on almost any smartphone that has near field communication.
- Apple announced a deal to purchase the mobile security company AuthenTec, possibly to integrate fingerprint sensors into the upcoming Passbook mobile wallet feature in iOS 6.
- PayPal, which is beta testing PayPal Here mobile payments, purchased card.io, which lets users purchase items by snapping a photo of their credit or debit card with their phone camera. PayPal also unveiled a credit and debit card reader (similar to Square's product) that's inserted into a mobile device's audio port.
- Isis, the mobile payments venture of AT&T Mobility, T-Mobile USA, and Verizon Wireless, posted a series of tutorials explaining how the service will work. Isis will test its service in Austin and Salt Lake City this summer.
- Intuit, whose recently launched GoPayment product is similar to Square's plastic card reader for smartphones and tablets, said it is integrating its QuickBooks Point of Sale software into POS systems for mobile phone payments.
- MasterCard unveiled the PayPass Wallet Services digital platform for online, in-store, and wireless purchases.
- VeriFone Systems introduced SAIL, a smartphone and tablet card reader that is similar to Square's product.
So the MCX is just one of many mobile payment ventures. Yes, the group is unique because it's composed of major retailers. But it still has to work with all the other companies that are vital to mobile payments: transaction processors, credit/debit card companies, POS manufacturers, cellular operators, and software developers. All these ventures take a long time to even begin beta testing.
I assume the new group will begin testing its mobile payment platform late this year or early next year, but even if it's successful, it won't be released commercially until late in 2013.
— Alan Reiter, President, Wireless Internet & Mobile Computing