The Green Sheet Online Edition
February 23, 2015 • Issue 15:02:02
MCX braves upstream CurrentC launch
Three years after Merchant Customer Exchange (MCX) disclosed plans for a digital wallet, the CurrentC app is available for free download in Google Play and Apple iTunes stores.
Users in select launch zones can enter an invitation code and use the app at local stores and restaurants, while others can request to be notified when merchants in their areas are app-enabled.
MCX, a group of merchants including Target Corp., Wal-Mart Stores Inc., CVS Pharmacy, The Capital Grille, Exxon Mobil Corp., and other high-profile retail and hospitality brands, formed a coalition in 2012. Their charter was to simplify and expedite consumer checkout while alleviating merchant pain points associated with traditional credit card processing, such as interchange costs and early termination fees.
A detour around credit card rails
MCX Chief Executive Officer Dekkers Davidson spoke at the November 2014 Money2020 conference in Las Vegas. He described the coalition's vision of consolidating loyalty, coupons, rewards and favorite payment methods inside a mobile device, making payments easier for consumers and cost-effective for merchants.
CurrentC stores driver's license and Social Security numbers and bank account information in the cloud. Automated clearing house transactions directly debit consumer bank accounts, circumventing the costs of credit card transactions.
Following is the four-pronged value proposition set forth by Davidson and his team:
- Save money with stored coupons, personalized to match unique consumer preferences that are applied during the payment process.
- Earn rewards from participating merchants. Enrolled loyalty products are detected, applied and earned automatically during transactions.
- Simplify payments by choosing from an array of payment options, including personal checking accounts, merchant gift cards, and store-branded credit and debit accounts.
- Securitize the payment process, using tokenization and storing sensitive cardholder data in the CurrentC cloud vault rather than locally on mobile devices.
CurrentC wallet awaits consumer reviews
David True, Managing Director of Broadly Curious Advisors, described the mobile wallet concept as a "Jetson-like vision of the future" that may be susceptible to many of the same challenges as traditional physical wallets. He suggested individual retail apps might be a more efficient model for most consumers, who tend to patronize a few of their favorite merchants and don't need the encumbrance of a diversified digital wallet.
"It may be a digital wallet, but it could end up being another George Costanza wallet," True said, alluding to the popular comedian's riff on the unwieldy wallets stuffed with payment cards, receipts and loyalty products that many consumers carry.
Apple Pay, a formidable competitor
The strong reception received by Apple Pay after its October 2014 release was another factor influencing the CurrentC rollout. Years of research and development leading to the debut had been shrouded in secrecy while industry analysts speculated about technologies Apple would employ in its solution.
First Annapolis Consulting reported in February 2015 that 54 issuers representing 90 percent of total U.S. payment card volume support Apple Pay, and about 750 more banks and credit unions plan to follow suit. Additionally, vending machines, kiosks and parking meters have near-term plans to support Apple Pay.
To enable MCX to focus on CurrentC development, its merchants were initially restricted to the MCX digital wallet alternative. Media outlets reported on controversy among merchants, Apple Pay enthusiasts and MCX over this policy. However, growing consumer adoption of Apple Pay may persuade MCX member companies to include Apple Pay in their expanding mix of payment options.
Unlike Apple Pay, which relies on near field communication technology for the exchange of payment data between iPhones and POSs, CurrentC uses a dedicated app directly linked to consumer bank accounts, and quick response codes that are scanned at the POS.
True noted that Apple controls the iPhone ecosystem, a competitive advantage that results in an average of 1 to 2 seconds per payment transaction. By contrast, the CurrentC payment process took 40 seconds to complete in a recent demonstration, he said.
"It's difficult for Android systems to compete with Apple's ease of payments at the POS," True said, adding that in-app payments offer retailers of any size opportunities to engage with customers on showroom floors, selling and helping, and eliminating long, counterproductive checkout lines.
Technology companies have historically been damaged by premature announcements and unanticipated negative events, as in the recent example of Softcard, a mobile wallet company plagued by false starts, rebranding and layoffs.
Among the challenges of being an early mobile wallet, Softcard had to navigate a shifting regulatory landscape, competing interests of device manufacturers and mobile carriers, and slow merchant/consumer adoption cycles.
The dustup over MCX's apparent refusal to allow its merchants to accept Apple Pay did nothing to enhance CurrentC's brand image, which was further damaged by a reported security breach in late October 2014. At the time, MCX noted in a statement to the press that the app itself was not affected by the breach. Only email addresses were stolen, and many were "dummies" used by MCX during initial phases of testing and development.
MCX remains vigilant about protecting consumer privacy due, in part, to its affiliation with members like CVS that are involved in healthcare services. "MCX is bound by law to adhere to strict rules regarding the privacy of consumers' information," Davidson said. "Our compliance with this law is required by HIPAA.
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