What Will Happen to MCX Going Forward?

The US based retail consortium Merchant Customer Exchange (MCX), which boasts big retailers as its members, is clearly struggling with its payments initiatives. A few months ago, on Sept 3rd 2014, MCX unveiled CurrentC — the brand for its new payment network. It came after a long wait and certainly after many false starts (and false rumors). CurrentC was unveiled as a mobile payment system exclusive to MCX members. It was portrayed as being able to do much more than simply acting as a repository of loyalty cards and a means of distributing, storing, and redeeming digital coupons and special offers. MCX came up with CurrentC as an alternative for retailers to reduce the interchange fees they have to pay banks, and to be able to accept mobile payments without costly upgrades. The issue that I bring up here is that CurrentC has yet to launch! Some other events have led me to believe that things are not all that great for MCX and CurrentC.

The mobile payments field is at an unprecedented height of action and commotion. Around the same time when CurrentC was unveiled, technology giant Apple came up with its own mobile payment system called Apple Pay. Apple Pay was launched in October last year as an NFC based mobile payment system. Apple Pay has yet to celebrate an anniversary, but has already reached 700,000 locations, and currently boasts 2,500 participating banks. Moreover, Apple Pay now has over 1.7% share of the mobile payments market in the US. How influential Apple Pay has become in the mobile payments field seems to be changing the perception of CurrentC amongst MCX members as well.

After the advent of Apple Pay, some merchants from MCX intentionally switched off their systems for Apple Pay acceptance at merchants (i.e, Rite Aid and CVS). Now they are again showing interest in NFC based mobile payment systems, especially Apple Pay. Meijer, an MCX member, is adamant on adopting Apple Pay, and it was recently revealed that Best Buy, one of the most important members of MCX, is itself getting on the Apple Pay bandwagon. Now this is indeed bad news for CurrentC. CurrentC’s ideology behind supporting non-NFC merchants seems to be failing because of rising interest in adoption of NFC based payments.

Thanks to Apple Pay, other NFC based mobile wallet systems such as Google Wallet are seeing an increase in acceptance as more and more NFC based POS terminals are spreading across the merchant space. Looking at CurrentC itself, it is not showing much promise. MCX was supposed to officially launch CurrentC by the end of last year. That didn’t happen. Then it was promised that it would launch earlier this year, another unfulfilled claim. Now it is being speculated that it will launch in the middle of this year, but with Best Buy opting for Apple Pay, it seems MCX members are not feeling that confident about CurrentC anymore. There’s no doubt that Best Buy, being one of the retails giants, is a major influencer for other MCX members.

With the fate of CurrentC hanging in the air, several future scenarios may or may not come to light:

Scenario 1: PayPal overtakes CurrentC

First, I would like to bring up CurrentC’s history. CurrentC was developed based on the white label mobile wallet solution provider Paydiant. Earlier this year, PayPal acquired Paydiant, and I believe that PayPal will be looking to leverage the work done by Paydiant. PayPal itself is trying to gain momentum in the merchant space through its OneTouch payment solution. As a payments giant, PayPal does have the capability to support (or even take over) CurrentC and integrate it into its own solutions in order to come up with something as a rival to other mobile wallet systems, specifically Apple Pay. If this happens, MCX and its retailers will gain a lot from a solid tech partner, as well as the 140 million+ users of Paypal that could start paying from day 1 at big box merchants. Seems difficult? It is.

Scenario 2: Apple takes over CurrentC

Let me go out on a limb here and say that this is indeed a possibility. Apple itself has a little bit of an issue here with merchant acceptance and definitely wants to become a payments giant. So it might be very interested in taking over CurrentC or powering MCX. It could be a win-win situation only if the interchange fee "problem" could be solved.

These two scenarios are simply speculations under the notion that anything can happen considering the rapid market changes that are evident in the payments space. The question still remains on the future of MCX and the relevance of CurrentC.