Retailer-Backed MCX Signs up ‘Heart’ of Commerce, Locks in Merchant Acceptance

While questions remain concerning when it will launch and how it will work, the Merchant Customer Exchange mobile-payments venture continues to sign up retail companies large and small. And in a twist unique to MCX, with each merchant it signs for acceptance it apparently fences off that merchant from competing mobile-wallet providers.

The latest merchants to enter the MCX fold are ExxonMobil Corp., grocery chain Giant Eagle Inc., convenience-store operator Kum & Go LC, and pharmacy chain Rite Aid Corp. The addition of these four retailers brings to 50 the number of merchants that have signed up for MCX, a year-old venture created by major merchants including Wal-Mart Stores Inc. and Best Buy Co. Inc. to offer a retailer-controlled alternative to existing mobile-payments initiatives.

Merchants that have agreed to accept MCX control more than 100,000 outlets and account for more than $1 trillion in spending, the Dallas-based venture says. “They’re getting up there,” notes Mary Monahan, research director for mobile at Pleasanton, Calif.-based payments-research firm Javelin Strategy & Research. Dallas-based ExxonMobil alone accounts for about 9,600 U.S. service stations, while Rite Aid, Camp Hill, Pa., boasts more than 4,600 stores. West Des Moines, Iowa-based Kum & Go has more than 420 locations, and Pittsburgh-based Giant Eagle claims 218.

By contrast, other mobile-payments ventures with national aspirations–including Google Inc.’s Google Wallet and Isis, an initiative controlled by mobile carriers–have struggled to recruit merchants. Many retail executives remain skeptical about consumer adoption of mobile wallets and are wary of how customer data will be controlled and shared.

But while MCX has yet to launch, both Google and Isis have products on the market. Isis kicked off its national rollout last month, while Google Wallet has been available nationwide since September 2011. “MCX has a lot of economic power, that’s for sure” with its merchant signups, says Monahan. “But it’s all talk until it’s actually out there. It’s just imaginary so far.”

It is also unclear what technology MCX will rely on for its payments and rewards system. Google Wallet and Isis use forms of a contactless protocol called near-field communication to link consumers’ mobile phones to point-of-sale terminals. Other linking technologies include quick-response (QR) codes and Bluetooth low energy, an emerging technology backed by Apple Inc. and PayPal Inc. MCX refused to comment for this story.

Still, MCX may enjoy some key advantages once it does go live. Chief among these could be its reported insistence that member merchants commit exclusively to MCX acceptance. As the venture signs more and more merchants controlling more and more outlets, that commitment could lock up significant numbers of stores. “This excludes Google Wallet, Isis, and every other mobile wallet,” notes David W. Schropfer, head of mobile commerce at The Luciano Group, a consulting firm in Red Hook, N.Y.

Another advantage lies in the type of merchants MCX has recruited so far. ExxonMobil, Giant Eagle, Kum & Go, and Rite Aid add to the petroleum, supermarket, c-store, and pharmacy chains MCX has already recruited, including Shell Oil Products U.S., Publix Super Markets Inc., 7-Eleven Inc., and CVS/pharmacy. These are merchants consumers interact with almost daily, experts say, paving the way for them to form new payments habits over time. “Any major gas or grocery chain is going to be significant,” says Schropfer. “This is the heart of activity. That will direct [consumer] behavior, it will change behavior. That’s why is so important.”

ExxonMobil could carry significance beyond its 9,000-plus locations. It has an existing contactless-payment system called Speedpass that allows customers to pay with a dongle on their keyring. Schropfer argues it won’t be difficult to rejigger Speedpass readers at the pump for MCX when the time comes. “MCX hasn’t said they’ll [adopt] NFC, but they haven’t said they won’t,” he says. “The point is there’s already a reader there, and it’s very widely utilized.”

ExxonMobil would not comment on specifics related to MCX. “By joining MCX, we are providing station customers with a safe, easy, and personalized method for making payments that integrates the benefits of promotional offers and location-based services for both motor-fuel and convenience-store purchases,” said a spokesperson in an email message.