Best Buy’s move to accept Apple Pay in its stores is the clearest public sign yet that the Merchant Customer Exchange has radically altered its vision of and ambitions regarding a retailer mobile wallet.

MCX’s CurrentC wallet was designed to lower interchange for merchants through the use of a cloud-based mobile wallet, while keeping merchants in control of consumer data. When Apple Pay launched last year with a structure that allied with the banking industry’s interchange pricing structure — and offered a bump in security —  it shifted the very nature of the market that MCX was developing for.

The MCX of today is radically different from the MCX that formed in 2012, said payments consultant Todd Ablowitz, who attended some of the group’s earliest meetings.

“At the time they started this, their hope was to run the table in mobile payments. They wanted to lock up big retailers,” said Ablowitz, who today is president of The Double Diamond Group. “But the nature of a consortium makes it move slowly. By any measure, MCX has moved slowly. Now, with the benefit of seeing Apple in the market and the quality of its offering, it seems almost silly to expect a retailer to be exclusive to MCX.”

Steve Mott, principal with payments consultancy BetterBuyDesign, said the idea of exclusivity made a lot more sense in the beginning, when MCX’s contracts were written and signed.

“The exclusivity idea was a logical way to help get off the ground with a new product in the heady period of the first generation of mobile wallets. It would be no different with a shared loyalty program–why support competing offers? That makes no business sense,” Mott said. “But now, knowing that the consumer adoption of mobile wallets and payments is a long, uphill climb for everyone—including Apple—there is less need to incubate or protect a nascent system. That plus Apple, which gets a free ride on its behavior from many people, clearly is putting pressure on merchants that naturally want more allocations of Apple products to sell in their stores.”

MCX’s goal must be to coexist with other wallets, rather than push them out of the market, Ablowitz said.

“The mobile operating system manufacturers—Apple and Google—they will win. This isn’t in question. They will win,” Ablowitz said.

PaymentsSource, April 28, 2015
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