Walmart-Backed MCX Aims to Dominate Mobile Payments
Will a new mobile payment system backed by the nation's biggest stores render Google Wallet obsolete? The newly formed Merchant Customer Exchange (MCX) network hopes so.
Retail heavyweights such as Wal-Mart (WMT), Target (TGT), Best Buy (BBY) and CVS (CVS) have banded behind MCX, a new mobile payment network that's angling to become the universal way shoppers pay for purchases with their smartphones.
Although development of the mobile application is still under way, MCX would compete with existing services such as Google (GOOG) Wallet, PayPal and technology from Square Inc., which is being adopted by Starbucks (SBUX).
The Rise of the Digital Wallet
"Digital wallets" enable shoppers to leave their deck of credit cards at home and instead simply use their smartphones to pay for purchases. And while new mobile payment options keep on popping up, retailers have yet to adopt a universal platform.
MCX could be that game changer, experts say -- not just because it has been designed for retailers by retailers, but because it will be adopted by the nation's biggest chains.
The 15 public retailers that have invested in MCX so far have a trillion in annual sales among them, notes Jeremy Mullman, a spokesman for MCX.
Because these are the chains that most people frequent, "they can create a [mobile payment] standard that's accepted everywhere," Mullman says. "That's a major point of differentiation from anything else."
For example, "you can start your day pumping gas at 7-Eleven, getting your groceries at Target and going to Lowe's and Best Buy to run your errands -- and you can do all those things paying the exact same way on your smartphone," Mullman says. As a result, MCX will create a "ubiquity" that will drive its mainstream usage.
Setting a Standard for Mobile Payments
There was plenty of support for that view in RetailWire's recent online forum covering the topic.
"It was always my position that retailers are holding the trump card in the mobile payment landscape," said Ed Dunn, founder of Stealth Operation.
But not everyone agrees.
While MCX "will give a boost to mobile payment systems ... it could also serve to confuse consumers," said Max Goldberg, founding partner for the Radical Clarity Group, on the RetailWire forum.
"There needs to be consolidation within mobile payment options. Consumers do not want to walk into a store and have to figure out which mobile payment application(s) are accepted. That would be a nonstarter. Until there is uniformity, mobile payments will not become widely used," he said.
And although MCX has the edge over other mobile payment platforms to drive adoption and usage among the nation's largest retailers, "it doesn't necessarily render the other mobile wallets and payment platforms obsolete," Jason Buechel, a senior executive in Accenture's Retail Practice, told DailyFinance.
"Many of the other wallets and payment platforms have already developed relationships with smaller businesses and online merchants which will continue to make up a significant portion of transactions," he said.
Time will tell.