The strategy behind the Merchant Customer Exchange mobile wallet is rooted in two central themes, controlling the cost of payments and maintaining exclusive ownership of consumers' transaction data.
Representatives from five of the merchant owners of MCX emphasized these priorities during a panel discussion Monday at the National Retail Federation's annual convention, ongoing this week in New York.
"We're open to partnering and playing with the existing networks, but not under the existing rule base," said Jamie Henry, senior payment director of Wal-Mart Stores Inc. "The existing rules that are in place for card-based payments are not going to be acceptable for mobile-based payments."
During the session, MCX executive Dodd Roberts detailed that the MCX wallet will be a cloud-based system that relies on bar codes for consumers to conduct transactions, an echo of comments he made during an earlier session at the convention.
But for the merchant owners of MCX, more important than the how is the why behind their collaboration with peers from other retail sectors—and in some cases, their direct competitors—to deploy a mobile wallet they expect will gain ubiquity by the sheer number of merchants locations expected to support the wallet.
"We wanted to protect and control our own customer data," said Kate Jaspon, vice president, corporate controller and treasurer of Dunkin Brands, the parent company of Dunkin' Donuts and Baskin Robbins "We wanted to be certain that what our customers were doing was not shared with our competitors."
In addition to controlling transaction data, merchants want to control the costs of mobile payments. The panel emphasized that MCX is not trying to create an alternative payments network to legacy credit card and debit systems and wants to work with existing networks.
However, the MCX merchants emphasized that the current initiatives, such as the Google and Isis mobile wallets, don't appeal to them. The concern is that the consumer transaction data that can be gleaned from these wallets will be used against the retailers who accept them.
With MCX, merchants would get more control over how data is collected and used, said John Manna, vice president and operational controller at home improvement retailer Lowe's Companies.
"What would those other wallets be doing with that data if they were the ones collecting it? Would they be using it or selling it?" Manna asked. "Would they use it to steer consumers to competing stores? The control and ownership of the data is really important to all of us retailers."
Roberts cautioned the audience of retailers about the nuances of how transaction data is used among the myriad mobile payments options coming to market. "If you're a merchant in this room and you're thinking about getting into mobile, with an MCX solution, your data is your data. Period."
To control costs, merchants must limit the number of mobile wallets they deploy. By collaborating on MCX, merchants are looking to provide a consistent experience for consumers to gain critical mass for the wallet and limit the complexities of accepting multiple wallets.
"Trying to get a POS project through at any merchant practically takes an act of God," Walmart's Henry said. "So to make a business case for five or six payments systems is just not going to work."
"We don't want our point of sale to look like the side of a NASCAR racecar, covered in logos for a variety of different payment providers," he added. "That level of complexity is not palatable for our environment."
Jaspon echoed the sentiment. "The fear of adding another layer of cost on with mobile was enough to get us to step up to the table," she said.
Also represented on the panel were executives from Gap and Wawa. Shelley Bransten Perelmuter, Gap's vice president of customer relationship management, said it was important for the clothing retailer to get an early seat at the table and ensure it had an equal voice in the initiative.
"We wondered, is this going to be the Walmart and Target show? And what say will other retailers have [that are] coming in? It's been surprising how collaborative it's been," she said. "Given what's at stake for all of us retailers, the value of the data, the value of the seamless experience is so important and that's driving the collaboration."
While the first iteration of the MCX mobile wallet will rely on bar code technology, the initiative will also be designed with flexibility in mind and the ability to adopt other new technologies as demands require.
"We believe that consumer confusion will impact the speed at which mobile is adopted on a wide basis," said Jay Culotta, treasurer of the grocer Wawa. "Making this simpler will help with broad adoption and help us implement in our stores."
"We'll get a solution through MCX with the ability to adapt the technology as appropriate, without forcing any technology unnecessarily," added Walmart's Henry. "Consumers won't have to upgrade their hardware and merchants won't have to upgrade their hardware at the point of sale."