Tuesday, August 21, 2012

What Does The Future Hold For Walmart-Backed MCX Payments?

This is a guest post by Nathan Sanderson.

With smart phones outselling PCs in the last quarter of 2011, it’s clear that mobile will pave the way for disruption in an array of different industries. One of the sectors that is most primed for change is the retail payment industry, where mobile payments are on the verge of exploding beyond the fringe and into the mainstream.

Many experts view mobile payments as a potential future replacement for credit card transactions. In fact, mobile payments are expected to be trillion dollar market as soon as 2017, according to a recent study by the respected Juniper Research group. In recent years, every major technology industry from Mobile wireless companies, to banks, to internet search engines have tried to capitalize on the upcoming mobile payments revolution. Major players like Google Wallet, Paypal, and Square all have a strong foothold and powerful backing, but the mobile payment war is just getting started. As it turns out, America’s major retailers want their piece of the pie and are banding together to launch a competitor to the mobile payment solutions of their technology competitors.

On Aug 15, 2012, some of the largest merchants in the United States have announced a new mobile wallet that will be known as Merchant customer Exchange, or MCX. MCX will be backed by such retailing giants as Walmart, Target, Sears, 7-11, Best Buy, and others. While the specifics of MCX’s mobile payment platform are still murky, it’s clear that MCX will be a force to be reckoned with in the mobile payments sector.

While the specifics may not be clear, one thing is for sure: due to their stronghold on the retail marketplace, MCX will have significant leverage in creating and marketing a wallet app that could potentially dominate the retail landscape. It’ll certainly be fascinating to watch how MCX will use their significant leverage to negotiate with banks and payment processors, standardize a payment system, and attempt to push customers away from traditional credit cards and debit cards.

Can the other major players in this space like Google, Paypal, and Square compete with a consortium of America’s largest retailers? They certainly can. While MCX is well placed to potentially squeeze out other payment providers as the mobile payment wars are fought over the next few years, all the aforementioned companies have an established base, technology expertise, and powerful backing. MCX on the other hand, is still little more than a press release – albeit with an impressive array of powerful backers. The only clear fact is that the moves made over the next few years by all the players in this arena will have a significant impact on the future of retail payments.

About the Author
Nat Sanderson is a full-time technology writer and blogger.