Though the Merchant Customer Exchange failed to deliver a consumer-facing mobile wallet for its mega-retailer backers, Buy It Mobility Networks (BIM) says the underlying technology blueprint it provided is still sound.
New York-based BIM Networks provided the Automated Clearing House decoupled debit system to drive MCX's planned CurrentC wallet. MCX's issues had less to do with technology and more to do with branding and policy — it asked Walmart, Target, Best Buy and other mega-merchants for exclusivity while falling behind the pace of the mobile wallet market. Those merchants were to be rewarded for their patience with a wallet that lowered their transaction costs and gave them control of customer data, but CurrentC never made it out of pilot.
Eventually, the retailers' exclusivity deals expired, and many quickly signed on with Apple Pay and other rival wallets — and the news was crushing. Best Buy, for example, announced its change of heart on an Apple earnings call in 2015. Best Buy didn't cut ties with MCX, but its decision made clear that the mega-merchants were no longer united in their vision for mobile payments.
BIM's pitch focuses less on cost and more on customer loyalty and relationships. It also casts a much smaller net; whereas MCX courted merchants from multiple verticals, BIM is initially working with everyday destinations like gas stations, quick-service restaurants and pharmacies, said Adam Frisch, president and CEO of BIM Networks.
At the same time, the company stresses that the merchant can build customer relationships through a branded digital tender used via mobile devices, e-commerce or at the physical point of sale. BIM merchants could also drive crossover promotions if a scenario called for it, Frisch added.
Many companies have attempted to save on processing fees by routing customer payments over ACH, whether by using a mobile wallet or a decoupled debit card. If the concept has thrived at all, it has been at gas stations. National Payment, now known as Zipline, has carved out its own niche in the fuel station and convenience store sector. MCX also focused on recruiting gas stations.
Decoupled debit has also worked as a branded option for Shell gas stations' fuel cards and in the larger retail arena as an option for Target's Red Card, but the business model is not a guaranteed success.
Tempo Payments, for example, was one of the first out of the gate with the concept nearly two decades ago but ultimately faltered, claiming that its business model was made less compelling when the Durbin amendment to the Dodd-Frank Act made debit routing less expensive.
"Private label debit has been tried a bunch of times, but the technology didn't exist before to enable it to succeed," Frisch said. "Historically, payments have been done at the end of interaction with the customer and done by a different brand, whether it is Visa, Mastercard, Discover, PayPal or Apple Pay. What we say is payments should be at the front of the interaction and with your brand name attached, because it is the opportunity to completely redefine their customers' buying experience with them."
BIM Networks currently provides technology for Phillips 66, 76 (formerly Union 76) and its Conoco-brand gas stations, and expects to add two more large fuel sellers in the coming weeks. The vendor hopes that what makes the payment method resonate at gas stations will find a similar welcome in other retail segments.
"When you pay with a direct pay method, you get 10 cents off a gallon of gas and a better buying experience," Frisch said. "That has been shown to work, and other sectors like quick-service restaurants or pharmacies can offer similar deals if the customer uses their branded tender."
BIM Networks has a business model that "falls right in line with the popularity of debit overall," said Richard Crone, chief executive of San Carlos, Calif.-based payments consulting firm Crone Consulting LLC. "It's a variation on a theme that has been around for a long time."
The obstacle for all of these types of programs has always been the consumer enrollment process, Crone said. Typically, consumers have to link a checking account by typing in the account and routing number from a paper check.
As check use has declined, fewer consumers carry checks with them, making it harder to sign up for a decoupled debit account on the spot.
"Many younger consumers don't even know what a paper check is, and they don't know what bank routing numbers are," Crone said. "Many people associate their debit card with their checking account, thinking the card number is their bank routing number."
Today merchants are watching the popularity of wallets like Walmart Pay and others that prefer debit but accept other tenders, Crone added.
BIM says it has streamlined the enrollment process to eliminate much of the friction associated with older decoupled debit products. BIM merchants do not require the consumer to provide a Social Security number or any bank account routing numbers. Instead, it seeks only phone, e-mail and online banking information to confirm accounts and identity. The company estimates it takes no more than 40 seconds to enroll. Ultimately, BIM wants merchants to focus on customer loyalty, while also seeing their payment acceptance costs decreased significantly.
Though the process cuts down on time, it doesn't sacrifice security, according to Frisch. BIM uses customer analytics, encryption and tokenization as key security layers.
"We make fraud protection part of the platform, and not something that will slow down registration," Frisch said. "The transactions are guaranteed, just like other networks."