Apple Pay's expanding footprint will soon include relationships with Discover Financial Services and Best Buy Co. Inc., according to separate announcements on April 27, 2015. These developments suggest Apple Inc.'s former rivals are succumbing to its strong momentum in the mobile payment space.
Discover was excluded from Apple Pay's launch in October 2014. And payments analysts believe Best Buy, a charter member of Merchant Customer Exchange (MCX), is disregarding MCX membership terms that reportedly preclude use of other mobile wallets. Diane Offereins, President of Payment Services at Discover, considers the Apple Pay user experience to be consistent with her employer's core values. "Discover's focus on simplicity and value for our cardmembers aligns well with the way Apple Pay makes purchases easy and convenient," she said.
Ease-of-use and convenience were founding principles at MCX, a consortium of leading retailers formed in 2012 to create CurrentC, a mobile wallet that bypasses traditional credit card rails and related fees. While terms and conditions of MCX membership have not been fully disclosed, it is widely believed that members pay up to $200,000 in dues and agree to three-year exclusivity for CurrentC, forgoing all other mobile payment schemes.
Best Buy, a member of MCX, joined the growing ranks of vendors and retailers in the United States that support Apple Pay contactless payments and in-app purchases initiated on Apple's family of devices including iPhones, iPads, and Apple Watches. This news coincided with management changes at MCX, which stated on April 28 that the departure of its Chief Executive Officer, Dekkers Davidson, was unrelated to Best Buy's adoption of Apple Pay on the previous day.
Unlike Apple Pay's use of near field communication (NFC) between an iPhone and POS, CurrentC uses a dedicated app inside mobile devices that links to consumer bank accounts and uses quick response codes at the POS.
CurrentC developers weathered a security data breach during an initial beta test and has achieved only limited pilots during the years following its 2012 debut. In vivid contrast to CurrentC's delayed launch, Apple Pay's launch and simultaneous broad deployment in the United States led to 1 million credit cards registered on its service in less than three days.
Nevertheless, payments analysts have observed that MCX interim CEO Brian V. Mooney brings a broad payments industry network and knowledge base that could potentially reshape the organization from an outlier to a more collaborative player in the mobile payments ecosystem.
MCX expects Mooney's leadership and guidance to help successfully launch the CurrentC mobile wallet in 2015. Mooney, former CEO and board member of Bank of America Merchant Services led that organization's multi-billion dollar acquiring, sales, operations, compliance and risk management divisions. He also served as Chief Financial Officer and President at First Data Merchant Services. Mooney stated that he looks forward to working with the MCX team to make "CurrentC the consumer preferred mobile payments app."
Despite business-as-usual assurances, more defections are expected within MCX ranks, both with internal personnel and incumbent retail members that want to support their customers' preferred payment methods. Rumors are circulating that Best Buy may not renew its MCX membership when it expires later this year. Meijer Inc., a Walker, Mich.-based convenience store chain, is accepting both the CurrentC wallet and Apple Pay at all it retail locations. Meijer spokesperson Frank Guglielmi said that the company's NFC-enabled hardware is capable of supporting both payment schemes and claims that the company has no plans to remove or disable either system.
Chris Gardner, co-founder of Paydiant Inc., the technology platform provider for CurrentC, reported that MCX will incorporate NFC and Bluetooth technologies in the next version of its mobile wallet. These technologies may help to facilitate compatibility with many of the large, integrated POS systems favored by big-box retailers.
Payments industry consultant David True, Managing Director of Broadly Curious Advisors, alluded to possible tensions between the original architects of the CurrentC wallet who were mostly finance and marketing executives responsible for driving commerce initiatives.
"MCX was founded on the premise of avoiding traditional credit card processing at a time when mobile strategies were still developing," True said. He also noted that retail marketers recognize that a growing number of their customers use Apple's iOS. He suggested that catering to the approximately 80 percent customer demographic that uses iOS and managing an array of app-driven consumer incentives such as loyalty, frequency, and incentives are of more concern to marketers than finance executives focused on transaction fees and interchange.
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