Walmart, Target, Best Buy team for cross-merchant mobile wallet

August 15, 2012 | By Jason Ankeny

More than a dozen leading U.S. merchants are banding together to create their own nationwide mobile commerce network designed to rival efforts like Google (NASDAQ:GOOG) Wallet and Isis, the point-of-sale initiative spearheaded by Verizon Wireless (NYSE:VZ), AT&T (NYSE:T) and T-Mobile USA.

The new Merchant Customer Exchange aligns big-box retail chains Walmart, Target, Best Buy and Sears with 7-Eleven, Alon Brands, CVS Pharmacy, Darden Restaurants, HMSHost, Hy-Vee, Lowe's, Publix Super Markets, Shell Oil and Sunoco. The companies--which together account for roughly $1 trillion in annual sales--are developing a mobile application supporting smartphone-enabled purchases across all participating merchants as well as consumer offers, promotions and retail programs. MCX declined to reveal additional details but promised the app will be available across virtually all smartphones, which suggests its technology may bypass native app experiences in favor of the cross-platform HTML5 web standard.

The Wall Street Journal first reported on the nascent MCX initiative in early March--according to sources, retailers are displeased by the inroads made by Google, Isis and other m-commerce players and want to reclaim control over the customer experience. On Wednesday, The Wall Street Journal reported MCX has not yet determined a launch date or hired a CEO, although an executive search is underway. The report adds it is unclear how much each retailer is contributing to building out the MCX network.

When the MCX app does reach consumers, it will lag behind the Near Field Communications-based Google Wallet, which launched last year. Google Wallet enables consumers to make purchases by tapping their Android smartphone at more than 200,000 MasterCard PayPass-enabled merchant terminals across the U.S.; adoption of the service has been slow, however, and remains limited to only a handful of devices offered by Sprint Nextel (NYSE:S). Sprint's U.S. carrier rivals have instead thrown their collective weight behind Isis, the rival NFC effort slated to begin consumer trials this month.

MCX also faces competition from eBay-owned PayPal, which offers mobile wallet services available at national retail chains including Home Depot, Abercrombie & Fitch and Jos. A. Bank. PayPal also supports PayPal Here, which enables small businesses and other users to process credit and debit transactions by swiping the card through a small, triangle-shaped dongle that attaches to their smartphone or tablet. More than 300,000 merchants in the U.S. and Hong Kong have signed up for PayPal Here since it launched in March.

PayPal Here closely resembles Square, which earlier this month announced an agreement to roll out its mobile payment services across coffeehouse chain Starbucks' 7,000 company-owned U.S. locations. Square offers dongle-enabled transaction services as well as corresponding smartphone apps; users are now processing more than $6 billion in payments on an annualized basis. Intuit's GoPayment and VeriFone's SAIL offer dongle-based card reader services as well.

Critics have long maintained that the proliferation of rival mobile commerce services will confuse consumers and slow adoption, a challenge MCX does nothing to solve. Last week, Google, PayPal, Isis, VeriFone and Intuit teamed with the four major U.S. carriers to forge the Mobile Payments Committee, designed to create policies and business strategies to guide the m-commerce segment as it matures.

For now, MCX will go its own way: "We're open to all partners, but it has to be beneficial to member merchants in a way that improves the system and doesn't layer on additional costs," Mike Cook, Walmart's corporate vice president and assistant treasurer, told the Journal. Terry Scully, president of Target's financial and retail services, added that MCX's members will rely on their retail expertise to deliver a superior mobile user experience, stating "I do believe that retailers are uniquely qualified to address what we believe are consumer desires in this space."

For more:
- read this release
- read this Wall Street Journal article