Wednesday, August 15, 2012

Retailers Stepping Up To Build Own Mobile Wallet Network

By Randy Smith, Mobile Wallet Media
Wednesday, August 15h, 2012

It has always baffled me as to why retailers have not banded together to form their own mobile wallet network. The benefits are too many to not engage in doing so.

Today with the announcement of Merchant Customer Exchange (MCX), leading retailers Wal-Mart, Target, 7-11, Best Buy, CVS, Darden Restaurants and more, a much anticipated 'Retailer Mobile Wallet Network' focused on serving their customers has formed. MCX has not revealed the technology to be used to enable their mobile wallet, nor have they hinted as to when the service will be available.

In the release Mike Cook, corporate vice president and assistant treasurer at Wal-Mart said “MCX will leverage mobile technology to give consumers a faster and more convenient shopping experience while eliminating unnecessary costs for all stakeholders. The MCX platform will employ secure technology to deliver an efficiency-enhancing mobile solution available to all merchant categories, including retail stores, casual dining, petroleum and e-commerce.”

Over the past several years, the goal to create a standard format enabling simple, fast and secure mobile payments, via a mobile wallet, has proved to be a long and drawn out process.

NFC tech, long used in Japan for conducting mobile payments, has been the leading choice of Google Wallet, ISIS (Carrier network), Visa, MasterCard, PCI (Payment Card Industry - card data security rules) and payment terminal manufacturers such as Verifone. NFC tech has been slow to gain traction because retailers have not wanted to pay for the replacement of existing terminals, that may end up needing replacing again if they jump too early. Alternative methods have been introduced by Square and LevelUp that use scanning of 2D bar codes displayed on
mobile wallet smartphone apps.

No matter how you slice it, it seems there is always a 'chicken and egg' problem that will not go away. But now with the retailers 'flexing their mobile muscle,' it is beginning to look like there is no clear favorite to dominate as a single format (I already went over in depth in my previous article). But just like retailers must embrace Facebook, Twitter, Google+ and accept all four major payment brands, they will also need to accept other payment networks beyond their own. This is about consumer reach.

The retailers should most definitely maximize their marketing reach, but the bottom line is they still have to get their customers to return to their stores. Reaching customers through various and many marketing channels has always been a winning strategy, and nothing will change here.

In the release, Mark Williams, president of financial services at Best Buy said “As merchants, no one understands our customers’ shopping and payment experience better than we do, and we’re confident that together we can develop a technology solution that makes that experience more engaging, convenient and efficient".

A key advantage for MCX is the cost savings to deliver mobile payments, offers and loyalty through their own platform. I imagine that the retailers themselves have hired a consulting firm to work with them on this to deliver and manage the solution. If so, they will still need to 'put their pants on one leg at a time' and have to pay someone, but the costs are likely to much lower. Their are a ton of moving parts and various POS systems that need to be integrated and connected to a single platform.

I know very well this model is a very real possibility, as the company I founded, MobilePayUSA, has a 'Universal and Patent-Pending Solution' that sounds much like the MCX solution. The retail network proposed by MCX brings added disruption not only to the payments space, but also the mobile loyalty and advertising space. I am writing two series (The 7S's Required for Success in Mobile Payments and SuperCommerce) this Summer and Fall that speak directly to this upcoming disruption and merging of payments, marketing and mobile.

Mobile Wallet Media is a media, analyst and consulting firm focused on the future of mobile commerce. The company mission is to highlight industry innovation and provide insights and opinions that will be relevant and forward-looking. The author, Randy Smith, is the primary founder, inventor and former CEO of MobilePayUSA, a TechCrunch Disrupt Startup Alley Winner.

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