In a move that opens a new front in the ongoing bricks-and-mortar versus e-commerce struggle, a group of fifteen major retailers have joined forces to develop a new mobile payment system to challenge Google Wallet.
The consortium, which includes such American heavy-hitters as 7-Eleven, Best Buy, CVS, Lowe's, Shell, Target, and Walmart, has formed a new company called Merchant Customer Exchange (MCX), which will offer a mobile-commerce solution under the same name.
"Combined, these participating member merchants already serve nearly every smartphone-enabled American on a weekly basis, giving MCX the unique ability to offer a mobile-commerce solution that truly works for consumers," the group's website says.
In a press release issued on Wednesday, the group said that the combined annual sales of its founding members totaled around $1tn. Doubtless the MCX members would like to hang onto as much of that pie as possible as the market for mobile transactions grows.
According to a Juniper Research report, although sales of physical goods by mobile phone are only expected to account for 4 per cent of retail transactions by 2017, they will amount to more than $1.3tn in total revenue.
So far, MCX has shared little about how its payment system will work, except to say that development of its mobile application is underway that it will offer "a flexible solution that will offer merchants a customizable platform with the features and functionality needed to best meet consumers' needs" – for all that's worth.
The one telling statement it has made is that its application "will be available through virtually any smartphone."
This would seem to indicate that whatever form the MCX system takes, it will not be based on Near Field Communication (NFC), the pay-by-bonk tech that powers Google Wallet. At present, NFC is only available on a relatively select group of handsets, which doesn't include any current iPhone models.
More likely, MCX will involve technologies that are already built into most smartphones, such as SMS messaging, web-mediated transactions, or camera-based technologies such as QR codes.
In addition to Google Wallet, MCX faces competition from a number of other challengers. Leading the pack is Isis, a payment system backed by mobile carriers AT&T, T-Mobile, and Verizon; and Square, a startup currently valued at $3.25bn, which last week received a $25m investment from coffee megachain Starbucks.
The key to success for any of them will be convincing consumers to adopt the technology. MCX says it believes it can do that by providing an efficient system that works across a variety of brick-and-mortar businesses, including retail, casual dining, and fuel stations, in addition to allowing e-commerce.
"As merchants, no one understands our customers' shopping and payment experience better than we do," Best Buy's Mark Williams said in the MCX press release, "and we're confident that together we can develop a technology solution that makes that experience more engaging, convenient and efficient." ®