MCX: Of the Merchants, By the Merchants, For the Merchants

With ISIS finally having launched nationally in the U.S., many will be watching to track its success (or lack thereof).  Yet, perhaps stakeholders should be turning their attention to another more promising mobile payment solution: MCX.

Merchant Customer Exchange (MCX) represents a partnership of some of the largest U.S. retailers including Wal-Mart and Target.  The consortium’s aim is to bring to market a mobile payment solution that benefits the both the merchants that invest in and the consumers who use it.

Formed in August 2012, the company appears to be taking its time to get this right.  MCX announced in April it awarded Amsterdam-based Gemalto lead development of its payment wallet and tasked U.S.-based FIS with handling payment processing.  The mobile wallet has passed on NFC and will initially be launched using barcode technology.  However, the company has indicated they will leave the door open to extend to additional technology in the future.

MCX has a lot going for it.  It has the support of over thirty of the largest retailers in the U.S. including 7-eleven, Best Buy, CVS, and Sears.  Together, MCX retailers represent over $1 trillion USD in annual turnover.  The range of merchants is varied and includes grocers, restaurants, drugstores, home improvement/hardware retailers, and petrol stations, among others.  This is particularly significant as a good mix of merchant types means an equally diverse consumer group, which can bode well for adoption.

The retailer-led payment wallet has the potential to succeed where other mobile payment initiatives have struggled.  The key: merchant adoption.  Arguably, the Google Wallets of the world have failed at persuading merchants to invest in mobile point-of-sale (mPOS) infrastructure.  Merchant adoption is vital for driving mobile payment adoption.  If retailers don’t adopt, consumers very well can’t.  Consider that the MCX payment solution will be implemented in over 90,000 stores on day one, and that number will only continue to grow as more retailers sign on.  And there is little doubt merchants will adopt.  First, as a launch date draws nearer, the consortium will likely begin to actively target smaller retailers as well.  Otherwise, MCX risks the likes of Square, PayPal and other mobile payment providers reaching the vast number of small to medium sized retailers.  Second, MCX will very likely be architected to facilitate lower transaction costs compared to what merchants are used to paying – thanks to interchange fees.  With the volume of sales pumped through MCX retailers that could represent significant cost savings.

No definitive launch date has yet been announced for the MCX mobile wallet.  Hopefully, this launch will not be plagued with the number of delays ISIS faced.  A significant delay to market could be one hurdle to mass adoption if you believe MCX is already running behind the pack.  So long as MCX can stay the course and implement an elegant, user-friendly mobile payment wallet, this will be one to watch.  MCX Merchants stand a lot to gain so it will behoove them to get this right.

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Kelly Martin
About Kelly Martin 14 Articles
Having worked in both retail and commercial banking in the US, Kelly is passionate about product innovation in banking and payments. In her role as an Online Banking Product Manager for M&T Bank, Kelly roots her approach to product development in creating a rich and intuitive customer experience. The views and opinions expressed by Kelly are hers and in no way reflect those of M&T Bank.

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