Mobile Payment War: MCX to Challenge Google Wallet

MCX-Google-Wallet-mobile-payment-rfid-blogAs the mobile payment is still in its infancy, many retail giants want to get a piece of this big cake. Google is now faced with a new challenge from Wal-Mart, Target and a dozen more of the nation’s largest retailers. They are teaming up to take on Google and the wireless companies.

The new group is called the Merchant Customer Exchange (MCX) and is developing a mobile application that will allow customers to pay for goods at participating stores with their smartphones. The app will also give users exclusive coupons and deals.

In addition to Wal-Mart and Target, the consortium comprises 7-Eleven, Best Buy, CVS, Lowe’s, Publix, Sears, Shell, Sunoco, HMSHost, Hy-Vee, Alon and Darden Restaurants. They believe that with its scale of roughly $1 trillion altogether in annual sales, they’ll emerge as the standard for mobile payments.

“We believe MCX is uniquely qualified to offer the most comprehensive mobile payment options for consumers,” said Terry Scully, president of financial and retail services at Target, in a prepared statement. “By participating in MCX, merchants are in a position to effectively deliver innovative payment approaches that aren’t available today.”

It’s an ambitious project, but some other giants in the technology and retail sectors have shared it before it emerged.

For example, Google has partnered with Citigroup, MasterCard, Sprint, and a growing list of other financial institutions and wireless providers, to form “Google Wallet”, a method of paying by tapping a smartphone on a particular kind of reader. Last year, Verizon, AT&T, T-Mobile, JPMorgan Chase, Capital One and Barclays also worked together to form ISIS, another mobile wallet system.

Earlier this month, Starbucks announced that it would begin accepting payments from Square, yet another emerging company in the mobile payments space. In addition, eBay’s PayPal and Intuit also have mobile wallet solutions available for smartphones.

There’s no doubt that all of these competitors expect to share the mobile payment market which is believed to hit $617 billion by 2016, up from $171.5 billion this year, according to technology consultancy Gartner.

The problem facing the industry is fragmentation: for all the competitors in the space, they have yet to come up with a standard solution that will allow all of the various mobile wallet systems to work interchangeably.

Both Isis and Google Wallet are theoretically “open” services, which means any card company, carrier, manufacturer or even mobile operating system can participate. But so far, each has mostly gone in its own direction. For example, Verizon, an Isis member, has banned the Google Wallet app on its smartphones.

Of course there is some movement on that front: all four national wireless carriers, PayPal, Google, and most of the major credit card companies announced last week that they had formed a working group to hammer out some industry best practices.

Meanwhile, MCX believes its retail-based solution will prove superior to its rivals’. “As merchants, no one understands our customers’ shopping and payment experience better than we do,” said Mark Williams, president of financial services at Best Buy. “We’re confident that together we can develop a technology solution that makes that experience more engaging, convenient and efficient.”