Tuesday, January 15, 2013

Merchant Customer Exchange takes another deliberate step forward


The Merchant Consumer Exchange (MCX) took another measured step toward reality through a panel-based session in front of an audience of 250 at the National Retail Federation's annual Big Show at New York's Javits Center.  The presentation's main purposes was to encourage new retailers to join MCX as fellow owners as well as demonstrate that the work of building an organization that satisfies the needs of some fierce competitors is well underway.  Of particular note is the MCX's well developed set of operating rules to guide participation are well underway. Dates and details on when its mobile wallet solution will be delivery were absent.

MCX (pronounced M-secs by MCX executive Dodd Roberts) is "a merchant-owned mobile wallet from merchants, by retailers, for retailers" for use by a wide array of merchant types.  New "owners" were announced including Wawa and Dick's Sporting Goods.  The participating owners now represent over 400 million consumer visits each week, at 75,000 stores, with $1T in annual sales volume.  It's a credible crew.

The organization affirmed it is working on a barcode based smartphone-based wallet app. A stand-alone MCX mobile wallet will be available.  The payments underpinnings will be available via APIs for use by merchants within their own apps.  

Jamie Henry of Walmart did say MCX would work with issuers and card networks but not under card network rules.  He also said that, over the magstripe, the smartphone represents a big improvement in transaction security which will leverage the capabilities of "world class technology partners."

The presentation reviewed the organization's main principles:


  • Provide superior customer experience to create a streamlined, intuitive, convenient, fast, and easy transaction that enhances the relationship between customers and merchants.
  • Security.  To secure mobile transaction and manage the risk, the MCX will move away from magstripe to leverage barcodes in combination with cloud services.  Account tokenization will be a feature of the wallet service.  All PII will come out of the system.  With this approach, a software-based approach that makes use of the camera is all that's needed.  
  • Preserve and Enhance Customer Relations. This principle is about data ownership. The MCX panel participants were adamant on the principle that SKU-level data was the property of the individual merchant and the consumer.  This exclusive use principle was put forward as a direct challenge to the value proposition of Isis, PayPal, Google, and other intermediaries intent on monetization of consumer data.  
  • Provide Balanced Operating Rules that are equitable for all stakeholders.  "If we take today's card model and slap it onto the mobile phone, we will have missed a huge opportunity," according to Henry. Mobility occupies a very different environment and operating rules are written to reflect that new reality.
  • Employ a cost-based approach to pricing.  "How much more does that $300 transaction cost to handle than a $3 ticket?" was the  equestion asks by a Lowe's representative.  
  • Limit Stakeholder Burden.  The goal is to reduce complexity and minimize costs associated with mobile transactions.  In other words, this is addresses merchant objections to the PCI process and their need to fix what is, in their view, a data security problem generated by the payments industry.  

Addressing merchant needs beyond payment acceptance, MCX is intended to support "transactions and interactions" by embedding the MCX payment into the overall flow of the customer experience. Therefore, it is not tied to a specific brand of smartphone nor to NFC. "It's about far more than customer transactions.  It's about building relationships."

"Walmart looks at mobile as a way to drive a deeper relationships.  Mobile payments isn't a strategy.  Mobile commerce is," said Henry.  "Not everyone will have the Walmart app.  But once customers get accustomed to using the phone, our goal is for this to become the ubiquitous approach."  

Shelley Perelmutter, VP / CRM of Gap said, "we want to validate to consumers the validity of the approach by having competitors use the same approach."

No schedule of announcements was given nor was a development roadmap provided.

The waiting continues...


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