October 26, 2012
The retailers behind the Merchant Customer Exchange (MCX) mobile-payments initiative are united in backing the effort and remain committed to supporting only MCX for mobile payments in their stores, retail executives said during a panel discussion this week.
While details surrounding how customers will use the yet-to-be-launched MCX and how stores will accept it remain sketchy, the panel, which included representatives from Best Buy Co. Inc., CVS Caremark Corp., The Gap Inc., and Wal-Mart Stores Inc., dropped a few hints about how it will work. The discussion, which took place in Las Vegas during the Money2020 trade show, attracted a large crowd owing to the paucity of detail surrounding the initiative and the way its backers have positioned it as an alternative to major mobile-wallet services from such companies as Google Inc., Visa Inc., and Isis, a joint venture of the country’s three biggest mobile carriers.
News that major merchants were working on a mobile initiative first emerged last spring, and the MCX name was announced in August. The consortium, which is seeking to hire a chief executive, now consists of some 20 retail companies.
But while the merchants have complained loudly that existing wallet products merely replicate a payment structure and pricing regime they object to, they have been tightlipped about MCX, including such details as what payment products will be included, how those tender types will be accessed, whether non-retail companies will be included, and how, if at all, the MCX wallet will interact with other wallets. Nor did this week’s panel shed any light on when the product might debut.
During the panel discussion, the merchant representatives stressed inclusiveness without explaining how that will work. “We want to work with financial institutions, but we want to work with them a little differently than we have in the past,” noted Peter Nash, assistant treasurer at CVS, referring to ongoing battles with banks over transaction costs on cards. MCX is “definitely not an attack on financial institutions—they’ll be critical to the success of this,” added Mike Cook, vice president and assistant treasurer at Wal-Mart.
At the same time, the group made it clear they are not prepared to support multiple wallet products. Indeed, they could limit their support to just MCX. “We’ve chosen MCX as the solution we’ll accept,” said Cook. “We’re not going to spread our bets over seven or eight flavors of mobile payments.” He reminded the audience of the investment the retailers are making in the product, though what this sum has amounted to so far has not been disclosed. “We have a vested interest in making this solution successful,” Cook said. ‘We have a built-in customer base, a built-in acceptance network.” Nash said that as far as mobile payments is concerned, CVS is concentrating only on MCX. “We’ll remain that way until we bring it to market,” he added.
Still, Cook hinted at some broad outlines of how MCX might work. Each participating retailer will introduce its own app, from which customers can make MCX payments. Or they can pay from an overarching MCX app, he said. “Payment has to be embedded in the merchant app or the MCX app if the consumer doesn’t want 25 apps on his phone,” he said. As an example of the app’s probable lineup of features, Cook pointed to a recently released Wal-Mart app that helps customers navigate through stores to find merchandise and scan prices, among other things.
With rumors swirling that Wal-Mart is dominating the MCX consortium, the panelists were at pains to dispel that notion and stress the unity of the sponsoring retailers. “It’s not a Wal-Mart initiative, contrary to popular belief,” said Stephanie Swain, senior director of financial services at Best Buy. Support from the participants so far has been solid, the panel said. “I’ve never seen in 35 years [in retailing] such alignment,” observed Nash.
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