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With two strokes of the pen, Merchant Customer Exchange LLC has addressed one glaring weakness in its mobile wallet. By announcing a deal this week with JPMorgan Chase & Co.’s brand-new Chase Pay mobile-payments service and two weeks ago with a little-known New York City-based app provider called BIM Networks Inc., MCX brought open-loop and store-branded automated clearing house payments to its fledgling CurrentC service.
CurrentC, which has been undergoing a pilot in Columbus, Ohio, since Sept. 15, holds considerable promise for MCX’s 40 big-box merchant owners but has suffered from a narrow range of payment options: bank-account transfers and the proprietary RedCard credit and debit card from MCX member Target Corp.
Earlier this month, MCX chief executive Brian Mooney said the retailer consortium planned to introduce a payment option that would let consumers buy with a network-branded product. By tying into Chase Pay, MCX has delivered on that promise, Mooney says. “We now have an open-loop debit and credit card in our wallet,” he told the audience attending the Money 20/20 fintech conference in Las Vegas this week.
Chase Pay will ultimately incorporate the money-center bank’s 94 million credit and debit card accounts and will work with barcodes, the method CurrentC relies on to link consumers’ smart phones with the retailer’s point of sale. MCX is clearly counting on Chase’s national breadth to give CurrentC a boost. “The same people who carry a Chase card are the same people who walk into our merchants every day,” Mooney told the audience
And, while the deal hands open-loop payments to CurrentC, it also benefits Chase Pay by widening its reach beyond the merchants that are part of the bank’s Chase Commerce Solutions network. “Everywhere CurrentC is accepted Chase Pay is going to be accepted,” Mooney said. The MCX consortium’s 40 owners control 70 retail brands like Best Buy, CVS, Shell, and Walmart and account for about 100,000 locations. It is not clear, however, how soon MCX will expand CurrentC’s operations beyond Columbus.
The Chase Pay deal, though, tended to overshadow an agreement MCX announced earlier that could hold significant potential of its own. This agreement will add an ACH-based payment method to CurrentC that will work on virtually any mobile device and that the MCX merchants will be able to attach their own brands to.
BIM Networks (the “BIM” stand for Buy It Mobile), a 6-year-old startup, allows consumers to pay from a checking account and guarantees funds to merchants, with settlement initiated next day. Merchants add BIM to their existing mobile app as an additional so-called tender type, brand it, and add loyalty points and other offers as an inducement to use it.
While MCX already offers ACH-based bank-account transfers, BIM’s edge may lie in the swiftness of consumer enrollment. This process, which BIM chief executive Adam Frisch estimates typically takes one to three days, has been condensed by BIM to about 40 seconds. On BIM’s app, users enter a user name and password, type in an email address, and scan a drivers’ license or state-issued ID. Authentication is based on a 4-digit PIN, but the company plans to enter a biometric identifier next year, Frisch told a Money 20/20 crowd.
By radically shortening enrollment, Frisch figures merchants can get customers shopping and buying sooner with the ACH’s low-cost payment method. “BIM has made ACH at the point of sale a reality,” he told the crowd. “Yes, it’s about lower fees but it’s also about selling more.”
As with any other ACH service, BIM is tied to the network’s current settlement window. Merchants can receive funds the next day if they enter transactions by 3 p.m. With the ACH adding more settlement windows starting next year, however, same-day settlement will replace the next-day routine.
BIM works with barcodes but also with near-field communication, and can also be used for online purchases, Frisch said. Features like this apparently appealed to MCX as it sought a smoother path to enable ACH. The network’s big cost advantage over open-loop payment cards has long drawn retailers. “For us, [BIM] was a natural thing,” Mooney said at the conference.
