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.
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.
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.
I'm sure you hit the crux of the matter with: '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."
Cetainly, individual retailers try to get customers to take on their own credit cards to save the transaction fees from others and do their own spying ... eh data collection on the customer's spending habita.
Wow -- that was a fast reply! My blog was just posted!
Yes, getting access to as much customer data as possible is, as you certainly know, a very big deal. Any retailer having to deal with Apple understands the frustration of getting only crumbs of customer data. Google and Isis might be better than Apple, but establishing your own mobile payment platform guarantees (more or less) that you'd get as much data as data possible.
This year and next year will be a big mess for businesses and consumers as they try to figure out which mobile payments platform(s) to test. Many times when I've used Google Wallet the staff are amazed and haven't seen it used before. Many have no idea it was possible and never have seen people even use a credit card with a chip to pay for purchases with a touch on the POS terminal.
Alan, you mention nine mobile payment systems and I'm sure there are more lurking. What would prompt anyone to have & have to manage more than one or 2 or 3 on their phone? You mention you have Google Wallet, do you have others? Am I making a mountain out of a molehill?
What would prompt anyone to have more than one or two credit cards or loyalty cards or transportation cards? It all depends on the benefits and whether there is only one way to obtain them or whether the mobile payments way is the best way.
The ideal is to have one application to rule them all and...bind them. But there were 19 rings plus the One ring. So who are we to expect fewer mobile payment apps?! (Okay, enough nonsense.)
I have the Google Wallet app and the Starbucks app. I'm sure I'll try other mobile payment apps, like Isis, when they are available. Who knows which one -- or more likely, which ones -- will succeed?
So the MCX is just one of many mobile payment ventures. Yes, the group is unique because it's composed of major retailers
To keep its identity and to succeed, it should add more retailers to its kitty as Food outlets (McDonalds,Subway,KFC...), fuel stations (Exxon, Chevron..) and healthcare product retailers. There are still many people thronging the stores so MCX better be fast to time the market. The Googles, Apples are busy promoting their platforms and ads which MCX should make use off...
Also the point to be considered is "The companies want to obtain as much customer information as possible without having to beg Google Wallet" by which they can provide great offers and facilities and bootstrap the process...
Its a great welcome news in this complicated merchant-client system and let the competition bring something good to the table....
The retailers want to their its hands on more customer data and will further muddy the already confusing mobile payment waters.
@Alan, thanks for the update. I totally agree with your opinion. I am not sure what prompted the major retailers to define their own payment system. Already the end users have so many options and this one more option will really confuse them. Any distinct advantage for those retail companies of using this particular payment over existing systems ?
the Fundamental Error in the entire PCI system is that the PCI system takes the customer's information and stores it where hackers can get to it.
hackers break into merchant systems (e.g. Heartland, Hannaford, Dave & Busters ) and steal the customers information: in bulk.
this level of attack wasn't feasible for dumpster-diving crooks trying to swipe used carbon paper
high speed data processing has changed the fundamental nature of the security problem -- not just by the speed by which it operates but also by the anonymous remote network access
security is now a very different problem and it is going to take a sea change in thinking to effect correction
unfortunately I think Bruce Schneier is right: it's going to take product liability law to hit the marketing people hard enough to make them change their ways. we must shift the cost of security from the customers onto those who have the ability to correct the problems: OEM software builders and marketing agencies.
I'll get a lot of replies to this, to the effect "can't be done", "ain't gonna happen", "Ha ha ho ho hee hee rof,lmao"
and the hackers will have a field day. and those foolish enough to participate in this ill-advised process will bear the cost.
"and the hackers will have a field day. and those foolish enough to participate in this ill-advised process will bear the cost."
Are you saying that this MCX payment venture will make things even easier for hackers? The group will certainly make sure that the platform is secure and reliable before they release it, don't you think?
Will the MCX platform enable the retailers to have more control over customer information? What will the benefits and dangers be for people using the platforms. Can customers refuse to use the platform?
Hi Alan, I'm not sure the trade off is worth it to consumers. The biggest concerns are security and privacy over deals and coupons. In my mind's eye this doesn't seem equally balanced
The ThinkerNet does not reflect the views of TechWeb. The ThinkerNet is an informal means of communication to members and visitors of the Internet Evolution site. Individual authors are chosen by Internet Evolution to blog. Neither Internet Evolution nor TechWeb assume responsibility for comments, claims, or opinions made by authors and ThinkerNet bloggers. They are no substitute for your own research and should not be relied upon for trading or any other purpose.
In the past few weeks, Evernote, Twitter, and LinkedIn have implemented an optional security feature: two-step verification. It's time -- perhaps even past due -- for enterprises to consider offering this feature as well.
A horror story could unfold if Gartner is correct that many businesses will soon be forcing their employees to bring their own devices to work. It might seem like great news to people who want to use their own gear, but the policy could turn ugly for both employees and IT departments.
The apartment and house sharing service, Airbnb, now requires members to verify their identities by demonstrating a presence on the web, and by either scanning a government ID or entering detailed personal details. Other enterprises should take a close look at Airbnb's verification policies.
Enterprises must keep a close eye on the Marketplace Fairness Act, now before Congress, which would allow a nationwide sales tax on US online purchases. The bill's enactment will affect every business that operates or buys from an e-commerce website.
Samsung Electronics recently announced two Galaxy Mega branded phones with enormous screens -- 5.8 inches and 6.3 inches -- that could be useful for enterprises, especially those in vertical markets.
The Amazon smartphone rumor and the Apple mini-iPad rumor show that the mobile device giants think they have to be in all the device spaces to win. Why? Because the cloud can create an ecosystem where every device can cooperate to support the user, and if you don't supply all the devices you miss out on the total value.
Verizon's one-data-plan-for-all-devices could revolutionize mobile data by making it practical to have multiple devices share a plan, and thus encourage users to cellular-equip all their portable appliances.
To date, smartphone apps have only been able to work with 50Meg chunks of information. Well, recent technical advances have been able to boost that number to 4Gbytes. Consequently, developers will be able to work with more complex data types. But will wireless networks be able to handle the additional traffic?
People are right to be disappointed by Apple's iPhone 4S announcement, but not because of the phone itself. Rather, they should be disappointed with Apple's lack of innovation with iCloud.
In the past, the most powerful brands became the products that they represented, whether it was Kleenex for tissues or Coke for colas. Super brands are no different on Internet. The techniques of branding might change, but the challenges to achieving super-brand status remain the same.
If you listen to the hype, clouds are everywhere. But if you look at the data, it turns out most customers say they still wouldn't use cloud computing for mission-critical apps or data. What's holding them back? Fritz investigates.
The sooner purveyors of cloud computing services can pass muster, security-wise, with financial services companies, the sooner cloud computing will really go mainstream.
In the final episode of this series about the death of Internet anonymity, Saunders describes how the Internet of the future will start to attain a level of intelligence that requires no human intervention. Scary.
What can users today do to protect their online privacy? The simplest and most obvious option is to not use the Internet – at all. However, once all digital information is consolidated over the Internet, trying to protect digital identity by simply unplugging from the Internet becomes impossible – a fact that has manifest implications for civil liberties, Saunders says.
Big-data and analytics tools enable marketers to understand customers as individuals, identifying unmet needs and addressing each customer as a "segment of one," says John Kennedy, VP corporate marketing, IBM.
New York's Metropolitan Transit Authority is conducting a pilot test of digital kiosks to guide subway users to where they want to go more efficiently and at lower cost.
The whole Amazon.reader debate is a double-stupid. It's stupid to think that there's any e-book buyer who doesn't know Amazon's URL, and it was stupider to let ICANN launch the whole free-form TLD initiative to start with.
While NFC's original goal was to enhance mobile commerce applications, it is finding its way into a number of other uses, which is creating both opportunity as well as challenges for IT departments.
Enterprises would like to move to cloud computing but are hesitant because they are concerned about providers’ ability to secure company data. Here are some tips that help to ensure that if breaches occur, the business is not left holding the bag.
Edmunds separates customers into segments based on the info it collects on its site and from partners, and uses that to push out custom content, said Brian Baron, director of business analytics for Edmunds.com, at Predictive Analytics Innovation Summit.
So here we are, the last day of the 2013 US Open Golf Championship at Merion, and Phil Mickelson -- who has been a US Open runner-up five times now but never taken the trophy -- is right up there at the top of the leaderboard.
Expert Integrated Systems: Changing the Experience & Economics of IT In this e-book, we take an in-depth look at these expert integrated systems -- what they are, how they work, and how they have the potential to help CIOs achieve dramatic savings while restoring IT's role as business innovator. READ THIS eBOOK
your weekly update of news, analysis, and
opinion from Internet Evolution - FREE! REGISTER HERE
Wanted! Site Moderators Internet Evolution is looking for a handful of readers to help moderate the message boards on our site – as well as engaging in high-IQ conversation with the industry mavens on our thinkerNet blogosphere. The job comes with various perks, bags of kudos, and GIANT bragging rights. Interested?
To save this item to your list of favorite Internet Evolution content so you can find it later in your Profile page, click the "Save It" button next to the item.
Email This
