Time is running out for CurrentC m-payment brand

Friday 30 January 2015 | 14:28 CET | Background

MCX, the mobile payment initiative launched in 2012 by large retailers promises to launch m-payment this year. The CurrentC service is still under construction, even though it is based on technology that was already widely available in 2012. Part of the reason for MCX to launch CurrentC was to battle card transaction fees. From the outset, the service did not seem to offer any benefits to the consumer, nor to the retailer. Three years later, time is running out.

The Merchant Customer Exchange (MCX) is a joint venture backed by a number of large US retail chains. Members include Walmart and Target. It was established in 2012 with the aim of launching a solution for mobile payment at point of sale. The solution is built around QR codes.

In September 2014, MCX announced the consumer brand will be called CurrentC and would be launched in 2015. In contrast to this, the CurrentC website is still a one-pager ‘watch this space'.

In 2013, MCX used the National Retail Federation’s annual Big Show in January to announce their plans. On this year’s edition however (11-13 January) they were absent from the list of attendees. Neither points to an imminent commercial launch.

Credit card fees

The motive for launching MCX is the cost of payment, especially with credit cards. Merchants typically pay 2-3 percent in interchange fees for card payments. The MCX members combined have annual retail sales of over one trillion dollars and a large chunk of that is paid with credit cards.

Redirecting payments to a cheaper (for the merchant) option – Automated Clearing House (ACH) transactions with banks – would bring direct and substantial savings, possibly adding billions to the bottom line. Alternatively, CurrentC could be used as leverage to negotiate transaction fees with the card networks.

Use case

Either way, that requires a compelling service. However, based on what is known about CurrentC, it does not seem to offer a compelling, must-have use case to shoppers.

Using the service means opening the CurrentC or shop-branded app, generating a QR code and presenting the phone so the sales attendee can scan the code. In most use cases, that doesn’t offer any benefits over cash, swiping a card or tapping a contactless interface.

Secondly, this new means of payment can't replace any of the existing methods, whether cash, cards or checks. Consumers generally are not eager to add new methods to the ones they already have.

One of the proposed benefits is the fact that coupons are redeemed automatically and loyalty rewards are collected. But that alone will not be compelling enough for many users. Coupons and loyalty points are not new, they already work but in a slightly different way. Merchants are investing heavily in mobile advertising, location based services, Google in-store search and so on.

Retailers could offer a fixed reduction on the bill, but that would negate any cost savings made on the transaction fees. That is therefore not likely to happen.

CurrentC uses the phrase ‘Cloud protected’ as a benefit, but that has lost some of its credibility as well. In October 2014, news broke that the beta test platform had been hacked and user data had been compromised. Perception can be hard to beat.

Exclusive contracts

If a service is not compelling for users, that affects the merchant as well. Every store will continue to handle existing payments, including all major credit cards. MCX however demands exclusivity from merchants who sign up for m-payment. The company restated that policy in a blog in October.

The exclusivity clause means that merchants cannot accept competing mobile payments, including Apple Pay. Several retail chains have indeed disabled NFC point of sale equipment when Apple Pay was announced.

That raises questions however. For a typical iPhone user, the Apple Pay service is linked to the credit card that is linked to iTunes. In other words: it is indistinguishable from the bank-branded credit card many use every day.

The store will still welcome that credit card if is presented as a piece of plastic. When that same card is presented as an iPhone 6, it will be refused. Surveys show that iPhone 6 users like the idea of Apple Pay and that take up is rising in stores that accept it.

Fierce Retail reported in January 2013 that MCX was signing up customers to three-year contracts. If that is the case, then these contracts should end somewhere this year. It does raise the question: for how much longer can MCX demand that merchants block live m-payment services, in order to protect a service that does not yet exist?

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