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Retailers to create m-payment competitor

Thursday 16 August 2012 | 11:13 CET | Background

Fourteen large retailers, including Walmart, Target, 7-Eleven and Sears have announced a joint platform for mobile payment. The Merchant Consumer Exchange or MCX will develop a mobile payment app for consumers to pay at cash registers. The platform also plans to integrate a wide range of consumer offers, promotions and retail programmes for participating retailers.

Merchants involved in the venture include Best Buy, CVS Caremark, Lowe's, Royal Dutch Shell, Publix Super Markets, Alon Brands, Darden Restaurants, Hy-Vee and HMSHost unit of Autogrill. The group aims to announce new members in the venture in the coming months, but scale is already apparent. The companies involved have combined annual sales of over USD 1.0 trillion, the Wall Street Journal calculates.

MCX is at an early stage, without a CEO or a launch date. It is unclear as yet how much money each participant will commit to for development. The technology should work on “virtually any smartphone”, which seems to indicate a non-NFC solution, from the outset at least.

Square

One key competitor, Square, already offers a such solution for merchants, turning an iPad into a touch screen cash register with the help of a mag stripe card reader. Location sharing (if the smartphone user has granted permission to share his location) will notify the shop that a regular has entered and the software will show buying habits and tally loyalty points.

The Square demo video seems made for incurable romantics (handsome customer approaching smiling waitress), but there’s definitely a commercial edge. Square has attracted a new round of funding, which values the company at USD 3.25 billion.

Starbucks Coffee Company and Square announced a partnership. Beginning this fall, in addition to the existing iPhone and Android Starbucks mobile payment applications, Starbucks customers will be able to ‘Pay with Square’.

At the same time, Square will process all Starbucks US credit and debit card transactions. It does serve as a warning shot aimed at the card networks, and the transaction fees they leverage over their payment networks.

But MCX en Square also target Google Wallet, the smartphone-based NFC-capable m-wallet and ISIS, the payment joint-venture created by the mobile operators.

According to the Wall Street Journal, Google and ISIS welcome the competition, saying that it will help foster the ecosystem and familiarize the audience. Be that as it may, the competition is increasing. The advent of the smartphone means that traditional payment networks will face competition from IP-based services using over-the-counter hardware.

The smart phone will take center stage, not only for handling payment at point-of-sale, but also for sending ads, offers and coupons. This will likely lead to fresh conflicts of interest over which customer relation (bank, mobile operator, smartphone OEM, software company) is the most important or whether competing services are allowed per se. Or at the very least, lead to new alliances.



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