Yesterday, a rumor at the Wall Street Journal stated that major retailers like Walmart, Target, and 7-Eleven were in the process of teaming up to create their own mobile payment solution. They sure didn't waste much time on making it official, as this morning that solution was announced as "MCX" - or, Merchant Customer Exchange. Sexy.

This is a big deal, though. And it's a big deal because of the names in the headline above - quite literally most places where Americans buy things have come together to create a mobile wallet system. But it's not just Target, Walmart, and Best Buy. Sunoco, Shell, and Alon are on board, which I think is pretty significant. There is probably nowhere Americans hate taking out their credit cards more than at the gas station. The machines are slow, dirty, and sometimes just don't work. Tapping your phone against the pump could be the thing that gets the mobile payment "behavior" ingrained here in the US.

Along with the already-mentioned companies, 7-Eleven, Publix (a major pharmacy and grocery chain in the Southeast), CVS, Darden Restaurants (Red Lobster, Olive Garden, LongHorn and more), HMSHost (they run most stores at major airports), Hy-Vee (a major grocery chain in the Midwest), Lowes, Sears, Michaels, and more are all on board. The members of this group account for over $1 trillion in sales a year around the world.


Suddenly, ISIS's $100 million in funding from the US's major wireless carriers doesn't look so scary. And in the end, it really is about the machine that retailers want sitting on their checkout aisles, and it appears the US's two largest general department stores have decided they want it to be their machine. No "Mobile Payments Committee" can change that.

While major retailers like Starbucks have hopped on with things like Pay With Square (Walmart even sells Square readers), it's easy to see this mega-mobile-payment-alliance having a snowball effect on the industry. Then again, carriers may just refuse to play ball with MCX, much as they have with pretty much any other mobile payment system using NFC.

But MCX's official press release never mentions NFC. Which is interesting, given how much of a buzzword (buzzacronym?) it's become of late. As close as they get to discussing what it actually is comes in this sentence:

Development of the mobile application is underway, with an initial focus on a flexible solution that will offer merchants a customizable platform with the features and functionality needed to best meet consumers' needs. The application will be available through virtually any smartphone.

So, we know it's an app. And we know it's going to work at all these places. According to MCX, every American with a smartphone visits one of these places at least once a week. That's the real kicker here - no American will be able to escape the MCX partnership "web." You'll encounter it, and if it starts becoming common enough to be convenient, you'll probably start using it.

As is typical of such services, MCX has also promised special offers and loyalty rewards as part of the platform. And if there's one thing that people like, it's saving money.

Could saving $2 on a 36-pack of Bud Light at Walmart by paying with a smartphone be the revolution that turns the still-young mobile payments industry on its head? I wouldn't be surprised.


David Ruddock
David's phone is whatever is currently sitting on his desk. He is an avid writer, and enjoys playing devil's advocate in editorials, and reviewing the latest phones and gadgets. He also doesn't usually write such boring sentences.

  • RedPandaAlex

    Anyone think the app won't suck?

    • ConCal

      so true

  • http://twitter.com/WillieFDiazSF William Diaz

    As long as these places still take Paypass, or Google Wallet, Ill be fine. IF they dont, I guess Ill be taking my business to other stores that do, or simply using my debit card as whatever produces the highest per transaction rate for the company - in an effort to show them that other forms of payment, and being ubiquitous to the needs of its demographic of customers is key.

  • Rolo P

    Eye catcher-36 pack of bud light..my prayers have been answered! As far as the topic of the story, it would be nice to just get something going that works just about everywhere. So get some pep in that step Google!!!

  • Peterson Silva

    Oh god why can't they sit their asses together and create a single interoperable platform. I hate this fucking jungle of solutions.

  • wideopn11

    Why are they trying to re-invent the wheel? Google has the solution in place already.

    • Mark Curtis

      Because they didn't invent it.
      Rather than work together for a compatible standard, companies (coalitions in this case) all want to be the ones to call the shots

    • fewill

      Google is a solution...but not...THE...solution. In fact, right now it is mostly just a prepaid card. Perhaps these retailers would like a solution that does away with transaction fees?

  • Downtownjeff

    Google and the four major carriers are working together on a mobile payment system. As we have seen with VZW and Google Wallet the carriers could block the MCX app. Twenty bucks says Best Buy came up with this idea. And they S.U.C.K.

  • FrillArtist

    Yeah, Walmart, Target and co are well renowned for their technological prowess and development. Why don't they just adopt existing ones like Google Wallet. Ugh.

  • fixxmyhead

    just please make something happen already i just wanna be able to use it on my s2

  • Paul_Werner

    Anyone notice that it lists CVS when CVS already accepts Google Wallet?


    Could this mean even though CVS is on this list they won't abandon GW?

  • http://www.facebook.com/jonathan.grubbs Jonathan Grubbs

    I would love to be able to try Google Wallet, but while I was able to install it on my AT&T Galaxy S III, it's still not supported by my carrier. I will be installing the MCX app if it will work on my phone.

  • http://codytoombs.wordpress.com/ Cody Toombs

    I'm not sure if I want to be happy about this or be terrified. Since Visa is tied up with ISIS, and Mastercard with Google Wallet, I don't see a major credit platform associated with this; which suggests that Walmart is truly at the wheel of this thing. I don't like the idea of Walmart having any more control over US commerce than they already do. On the other hand, I think Google kinda blew it with Wallet and ISIS is run by the only companies scarier than Walmart, cellular carriers. It all feels like a lose-lose. @RedPandaAlex:disqus makes a great point too, this thing is going to be miserable to use.

  • http://www.facebook.com/andresdroid Andres Schmois

    Doesn't anyone else feel really scared?

  • Ryan Stuckmaier

    "The application will be available through virtually any smartphone." makes me think it's not NFC at all. I wonder if it will involve QR codes somehow. Either one on the register that the phone scans or some kind of barcode on the phone that the register scans (I've tried this version before and it didn't work for me).

    • http://codytoombs.wordpress.com/ Cody Toombs

      I was thinking the same thing. Hardware dongles could be used too, but getting support across most phones is nearly impossible and it would be annoying to plug something into your phone or rely on something in a case.

      The only two things that are pretty universal that can be used in any form of external communication (that is reasonable for this) is the screen and bluetooth. Direct Bluetooth communication is dangerous, but it could theoretically be useful with a separate wireless device, but that's still a crappy experience when it's substantially easier to pull out a credit card. All that remains is an image read off of the screen, most likely a QR Code. It's not a bad idea, but it's more expensive (requires every terminal to have a camera and hardware powerful enough to do live image processing) and just seems so hacked together compared to NFC.

    • Freak4Dell

      It could be like how LevelUp does it...displays a QR code on your screen, which is scanned by the cashier's phone/terminal.

  • http://twitter.com/yellowspyder Spyder Ryder

    crap, another fragmented problem. Nobody wants an app... we want a physical device (NFC?) on our phones, and we want NFC because it's like 4 times more convenient than running ANY app. (turn on phone, find app, start app... follow instructions vs swipe your phone over a reader... come on! I won't use anything that requires more than one motion... I can get out my credit card in one motion and swipe it)

  • Freak4Dell

    You know, with all these different mobile payment systems coming out, I gotta wonder if some company will find a way to license all of them and create one terminal that will accept payments from them all. The stores wouldn't like it, since that might reduce the number of people using their own system, but it would also open up a bunch of sales, since it means anyone can shop there.

    I also wonder why this is even such a hot thing in the first place. Is there some profit-earning method that I'm missing here? The payments are still eventually processed by Visa, Mastercard, etc., so the stores still have to pay their transaction fees. Sure, the fees might be lower if there's more merchants on the same "account", but then wouldn't it be in their best interest to make one giant system with everybody, rather than multiple different systems? I figured Google wanted it because they can collect a bunch of data from it, but maybe there's more to it.

    • http://codytoombs.wordpress.com/ Cody Toombs

      This isn't a fight to be the new master, and it's a fight to be the next major middle man. In the same way that websites have to have a payment processor, so do brick and mortar stores. The thing is, it's nearly impossible to break into that industry now that a few big players are so deeply entrenched (just like 95% of all industries). The reason everybody is fighting over this is that they see it as a potential way of breaking into a super lucrative business. If everybody just got together to create a single system, nobody would get rich from it.

      • Freak4Dell

        Yeah, I understand that they want to be the middle man, but what I'm getting at is what do they get out of being the middle man? The goal of a middle man is to make money, but if everybody just turns themselves into a middle man, there's nobody to be the men on either side. The carriers wanting a payment system made sense...they'd charge the stores a transaction fee (and knowing carriers, an exorbitant one) and pocket the difference between what Visa, Mastercard, Amex, and Discover charged them. Google most likely is interested in the data more than the transaction fees. The stores creating their own doesn't make much sense. They can't pocket the difference in transaction fees, because they're just charging themselves in the first place. I guess they could try and sell their system to other stores, but like you said, the barrier to entry is pretty high. Stores that aren't a part of this alliance already have an established relationship with a processor, and it'd be foolish to think that the big processors now aren't going to be adding mobile payments when it becomes popular. There's not much reason to trash your existing processor and go with a new, unproven one. I still feel that these stores would have been better off pairing with Google. Google is typically competitive in their pricing structure, and they're most likely more interested in the data anyway, so transaction fees would probably be the same or even lower.

        I'm sure I'll feel stupid if someone points out whatever obvious thing I'm missing, but at this point, I just don't see this being lucrative enough to warrant forming a giant alliance.

        • http://codytoombs.wordpress.com/ Cody Toombs

          Sorry, this is long, it kind of covers a lot. First part covers how all of the parts fit together. The second part is mostly my theories on why each group wants in.

          At the top are the lending banks, Chase Manhattan, Bank of America, etc. These guys issue the credit cards and extend a line of credit. The cards they offer carry a specific brand...

          That brand is where Visa and Mastercard come in. They aren't just branded that way for no reason, it's because they are the middle men. They offer a service to the lending banks where they take care of the technology and management of millions of smaller accounts with the merchants...
          After that step, there can be several more types of middle men who take care of much smaller accounts and web sites. Paypal and Authorize.Net are excellent examples. It's worth mentioning, Google has been running their own internet-based processor called Google Checkout since 2006, but that has been merged into Google Wallet's branding.
          Google partnered with Mastercard and was looking to eventually partner with Visa and American Express. They aren't looking to eject these guys, but they are looking to wiggle into the chain of events. They are basically approaching Mastercard and saying, "We've got the dominate smartphone OS and we've got this really neat technology that people want to use. We'll hook up with you if you give us a percentage of all transactions that come through our technology". I'm not sure if Google cares much about their cut of that relatively small piece of pie; after all, they are probably only getting 15% of the ~2% Mastercard was already taking. I imagine Google's ultimate goal is to either become their own card issuer (like Chase Manhattan) or their own payment processor (like Mastercard), but for smaller banks (like Barclay). If that theory sounds crazy, keep in mind that there are a few rumors floating around that Apple is looking to do the same thing.
          The ISIS thing wasn't much different, except the cellular carriers probably aren't interested in the same things. They probably saw what Google was up to and called up Visa to say, "We can stop Google in it's tracks and hurt your rival at the same time, but you'll have to give us a good cut of transaction fees". It's simple extortion, and they (AT&T, T-Mobile and Verizon) partnered up because they didn't want anybody who wasn't included to end up partnering with Google like Sprint already had.
          This latest announcement about this coalition of stores is possibly something else. I think they are using "Mobile" as an excuse to create their own payment processor and possibly their own lending bank. Sears (and possibly others) have already had their own lending banks and a couple even do their own payment processing. For them, this is almost certainly going to be about cutting out the other banks and the payment processors entirely so they can keep transaction fees and profit on the interest instead of making that money for others. In reality, they will just join the ranks of the other banks and payment processors with their own, which will eventually become another option at the checkout line for a growing number of places that aren't already a part of this announcement. The obvious implication, they are trying to create another American Express and they are all trying to get in on the ground floor :)

          Disclaimer: Other than the stuff that is clearly fact, everything I've written is speculation and much of it is grossly simplified. Frankly, it gets WAY more confusing once you add in things like payment processing on the internet, credit unions, and a plethora of other things.

          • Freak4Dell

            That's a good theory. So I really wasn't missing anything obvious. I kind of had that thought bouncing around in the back of my head, but I guess I just have a completely different business sense than the management of these retailers, because I don't see it working that well. We'll just have to see where this goes, I guess.

          • http://codytoombs.wordpress.com/ Cody Toombs

            Well, if my theories are right, you can see it was basically about Google having a good idea and everybody else decided that they had the opportunity to screw the previous guy out of their position. As I see it, Google has a ton of incentive to do it, mostly because it's their one and only real chance to break into the payment industry. They want to democratize it the same way they did with smartphones, email and advertising. Google usually comes out ahead when they attack things in this way.

            I can easily see why MCX was created, it's their opportunity to free themselves from the costs sustained by current payment options and eventually profit on other companies the way that all of the established names have done for so long.

            I don't get ISIS...I see why Visa wants to do it and I see why the carriers want to do it...but I don't see either of them actually doing anything meaningful with it. Visa wants to leverage the carriers' stranglehold to prevent Mastercard from nudging them out of the game. The carriers...just want money and more control... It's the same story we've been hearing for a while now, they are just playing the game because they can. If ISIS takes off (I just audibly scoffed, I think they will be DOA), they will end up in a head-to-head with the Justice Department within the decade.