Lessons from MCX: 'One size does not fit all'

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CHICAGO — The retailer-driven Merchant Customer Exchange initiative to create a common mobile wallet had good intentions, but it overlooked the nature of retail itself — that each company has to differentiate itself to lure customers.

But the MCX experiment gave retailers a better understanding of just how much mobile technology is changing their world.

Even though MCX focused strongly on developing a payment mechanism through its CurrentC mobile wallet that would help retailers avoid interchange fees and better control their own customer data, it did not accurately figure in how individual members would protect their own brands. The CurrentC wallet never got out of the testing phase, and MCX folded more than two years ago.

"The MCX initiative faltered because retailers compete fiercely on what the consumer-facing experience will be for their customers,” said Laura Townsend, senior vice president of operations at the Merchant Advisory Group, which aids retailers in navigating various aspects of payments.

"One size does not fit all," she added.

The experiment did provide crucial lessons that helped MCX participants develop their own wallet apps or decide on which third-party wallets to support.

“What works at Walmart may not work at a quick-service restaurant or a gas station,” Townsend said Wednesday at the annual Mobile Payments Conference. “The payments piece is a critical component, but it is not the driver behind the mobile wallet. Think of payments as a supporting actor role.”

Five years ago, most retailers didn’t spend much time thinking what “engagement levers” for mobile might be, but Townsend said it is of critical importance now in developing a branded mobile wallet app, or entering into discussions with third-party providers.

With payments embedded in the correct spots along the customer engagement process, retailers have to understand the advantages of using the mobile channel to provide offers and deals, handle receipts and product returns, support loyalty programs and market to consumers about products and warranties.

“We can tell by the slow mobile wallet adoption that the technology has not found its sweet spot yet, but that is why retailers are working on their own vehicles to reach their customers,” Townsend said. “The third-party providers, like Apple Pay and Samsung Pay and others, are working on it too, but they aren’t there yet" with strong adoption.

The numerous wallet options available can create confusion for retailers, but their task is even more complex than simply deciding on a provider.

“As part of the strategic decisions, the retailer has to ask how mobile will impact the business operations in the back office and as part of the settlement process,” Townsend said. “There is more to look at, other than just the consumer experience.”

Mobile wallet technology differs, depending on whether a retailer chooses Near Field Communication, QR codes, beacons, apps or some other method to accept payments from customers. While moving to digital payments can reduce paper costs, they do present challenges at the point of sale, Townsend said. “Right now, there are no wallet identifiers at the POS, so the merchant would not know if the transaction came from one wallet or another.”

Ultimately, retailers have to be prepared to accept more mobile transactions, whether they occur at the POS, online or in-app.

“There are no contract terms with the ‘Pays,’ ” Townsend said. “If you have NFC at your terminal, the mobile payments just happen. The customer comes in with Apple Pay on their phone and makes a transaction.”

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