December 20, 2015
Every other month, yet another industry giant announces or gets into rumors of launching its own payment solution. This time, Target, a force behind MCX, is reported to be in the early stages of developing its own mobile wallet, as shared by Reuters.
Wallet from Target increases the pressure for Apple Pay and all other Pay’s already in the market and the ones to come. Target is the fourth-largest retailer in the US and with the financial power and its extensive store network, the proprietary wallet will instantly get a great base to roll out on. Target has not yet committed to launching the product. Even though it is too early to say, the wallet could be out as early as the beginning of 2016.
Target does not yet accept any mobile payments solutions in its stores, but the Apple Pay option is available in its mobile application. One of the Reuters resources also added that Target is planning to integrate its wallet into its existing mobile application, but does not intend to deploy the NFC technology like Apple and Android Pay are using. Instead, the retailer is in favor of the QR code technology, which is also used by Starbucks and Wal-Mart. Like Wal-Mart, Target aims to directly link customers' credit cards to its payment app.
Targets team has already been in talks with credit card companies, which are prone to process transactions using scanning technology to communicate with payment terminals, as unnamed sources shared. Even though Target is reported to be collaborating with card issuers, it has not been testing the wallet in stores yet.
The payments market is getting increasingly competitive with tech and retail giants launching their own solutions one after another. Apple Pay, Samsung Pay and Android Pay are already in a tight race. Target’s possible launch of its own wallet, however, it a fundamental power shift in the market.
Target’s RED store credit cards also cannot be ignored in light of this news. The retailer will have to find a way to integrate the card as well as all cards from other issuers to make the solution valuable for customers.
Gregory Burch, VP of strategic initiatives at Ingenico shared that given the proliferation of mobile payment services, retailers have to make it worthwhile for shoppers to use their mobile wallets in stores. At the end of the day, retailers have to shape and shift the habits of the customer, Burch believes.
What about MCX?
Target is a main force behind MCX, the only merchant-owned mobile commerce network built to streamline the customer shopping experience across all major retail verticals. MCX counts 63 members, some of which represent powerful petroleum and brick-and-mortar networks. Wal-Mart is one of the MCX members that shook up the foundation when it announced its own wallet last week. With Target launching its wallet, the viability of CurrentC, MCX`s wallet, will be seriously threatened.
Eddie Baeb, Target spokesperson, commented that the retailer is testing CurrentC in a few stores along with exploring additional mobile wallet solutions.
"Target is a participant of the MCX and we are testing its CurrentC mobile wallet with guests as part of a pilot in Columbus, Ohio," Baeb said.
Tech giants and FinTech companies along with new players like retailers, have been actively exploring the opportunities with mobile wallets with an expectation that consumers will reach the desired stage of sustained active usage.
Activities across industries to explore proprietary payment solutions are raising serious questions regarding the need for MCX and its CurrentC consumer brand. Initially, the competitive advantage was lower processing fees for retailers. With technology moving forward and the increasing density of the Pay club, cost-efficiency may stop being a competitive advantage.
Also not helping MCX is the fact that CurrentC has been in a pilot phase for quite a while, and there is only speculation so far that it will launch in the near future. Meanwhile, Apple Pay and other payments solutions have been gaining success among retail merchants. Apple Pay accounts for $2 of every $3 transacted using contactless payment methods. MCX members may now feel that they are missing something with possibly a wrong bet on MCX or in-house innovation underway in the mobile payments space.
A month ago, MCX announced the partnership with Chase to accept Chase Pay wherever CurrentC is accepted. At the time, MCX`s position seemed to be strengthened. But with the powerful force of Target almost bailing on CurrentC, nothing seems to be promising for MCX anymore.
It is hard to predict the future of MCX and CurrentC with this news. Even though Wal-Mart launched its wallet, it still remains an MCX member, which Target plans to be as well.
The urge to enter the payments industry for retailers is dictated by the need to stay relevant and offer the best possible and most convenient experience for customers. Brick-and-mortar retailers are especially dependent on in-store experiences, which leads to the necessity to improve and expand the payments options available and seize the possible financial gain.