Digital Transactions Authoritative, insightful and timely information for payments professionals
The retailer-backed Merchant Customer Exchange (MCX) mobile-payments system on Wednesday took another step toward its launch with the announcement that Netherlands-based Gemalto N.V. would provide the technology for its mobile wallet.
Gemalto, which employs 224 workers at its U.S. headquarters in Austin, Texas, is best known for producing SIM cards for mobile phones and Europay-MasterCard-Visa (EMV) chips for payment cards, in addition to providing near-field communication (NFC) technology. But it’s also getting into the crowded mobile-wallet field as payments using smart phones begin to take hold.
“MCX selected Gemalto for its sound financials, global footprint, deep technical expertise and organizational strength and its proven capabilities to deploy, host and operate ambitious solutions,” a spokesperson for Dallas-based MCX tells Digital Transactions News by e-mail. “In addition, Gemalto has a longstanding and proven track record in mobile payment and the mobile wallet, supporting major initiatives around the world, including Isis in the U.S., [the] Transfer payment platform in Mexico, NFC deployments in Japan and Singapore, as well as [being] a pioneer in NFC services in various European markets.”
While NFC is high-powered, secure technology, it requires upgrades at merchant terminals and smart phones, which few in the U.S. market currently have. MCX says its wallet will primarily be cloud-based and use barcodes. That puts MCX on par with current leaders in U.S. mobile payments such as PayPal Inc., Starbucks Corp., and Square Inc., which so far have eschewed NFC.
Gemalto’s platform leaves open the possibility that MCX could offer NFC payments later, however. “Its solution is technology agnostic with regards to payment means and communication channels—NFC, QR codes, barcodes, etc. These were all advantages to MCX in using Gemalto,” the spokesperson says.
Spokespersons for MCX and Gemalto would not talk about pricing or other financial details. But an industry source who asked not to be named tells Digital Transactions News that Gemalto offered MCX very favorable terms.
“The EMV-SIM card business is very slow,” the source says. “They’ve made a corporate decision to extend the business out. Gemalto won the business due to some very aggressive pricing.”
An analysts’ report from the London office of Germany-based Berenberg Bank says that while the mobile-wallet market is so competitive that margins are thin, the MCX deal nonetheless provides new opportunities for Gemalto, whose SIM business faces growth challenges.
“The contract win from MCX is [a] very strong reference deal for Gemalto, and we think MCX has a good chance of creating a truly disruptive and innovative payment system,” the report says.
In a news release, Gemalto senior vice president Jack Jania said, “The caliber and scale of the merchant organizations behind MCX creates opportunity to elevate mobile payments. We are excited that MCX chose our technology to implement and deliver their roadmap towards convenient and secure retail payments on all smart phones.”
MCX’s backers include Wal-Mart, Target, Best Buy, Sears, CVS, Lowe’s, The Gap, Dunkin’ Brands, 7-Eleven, Publix Super Markets, Bed Bath & Beyond, Dillard’s, and Shell. The merchants announced last year that they wanted their own mobile-payment and rewards system to reduce their costs of accepting conventional credit and debit cards and to increase customer loyalty. Some observers have speculated that MCX will use a decoupled-debit system to fund payments, but the MCX spokesperson would not confirm that.
MCX has been searching for a permanent chief executive for months but has yet to name one. The spokesperson says the search “is well under way” but wouldn’t say when MCX would have an announcement.
