For a customer to switch from a tried and true payment method to a new one, the provider must be able to offer a unique payment experience which offers concrete and obvious advantages like top-level security, unique rewards and unprecedented agility. For these reasons, the Merchant Customer Exchange's retailer-led mobile payments initiative CurrentC was bound to fail.
Despite the fact that the go-to-market was crucial, the CurrentC potential payment method plodded along while other options like Apple Pay, Android Pay and Samsung Pay streaked ahead. Whereas these e-wallets provide real native mobile experiences based on fingerprint recognition, CurrentC was centered on outdated QR Code scanning, which required the customer to use his camera and adjust it to accurately scan the code. When it came to security, CurrentC had a particularly weak offering – thieves could probably steal a mobile phone and then avoid the biometric authentication step to make fraudulent payments.
Timing also played a crucial role in this case: The October 2015 shift of liability due to the incorporation of EMV in the U.S. turned out to be particularly advantageous for the leading e-wallet operators: U.S. merchants were forced to acquire POS terminals capable of supporting EMV. As it happens, these terminals also support the NFC technologies upon which the leading e-wallets are based, providing them – particularly Apple Pay - with a powerful forward momentum.
CurrentC’s demise can also be attributed to the actions of some of the MCX consortium members, like Rite Aid and Best Buy; they started accepting Apple Pay in September 2015, thereby weakening their own case. Another member, Walmart, recently launched its own Walmart Pay app, a closed loop payment system which supports all of the major e-wallets and credit/debit cards, while providing rewards and special offers.
Apropos Walmart Pay, it would appear that the MCX consortium failed to attribute enough relevance to the growing trend amongst retailers to run with their own closed-loop mobile apps and e-wallets like Starbucks. The Starbucks model, which offers loyal customers rewards and enables them to order ahead and then pick up their already packed purchases, has met with resounding success.
Let’s not forget the importance of hooking up with the right financial institutions. Backed by international players, Apple Pay, Android Pay and Samsung Pay were able to reach advantageous terms with banks and card issuers worldwide. While CurrentC was backed by several leading U.S. retailers and might have succeeded on US soil, it lacked the power to establish effective global agreements with international financial entities. The consortium’s deal with JPMorgan Chase, according to which the bank would include the CurrentC application in its Chase Pay mobile-payments program, wasn’t enough to turn the tide. When announcing the additional delay in rollout, MCX CEO Brian Mooney hinted that the consortium may pursue a similar arrangement with other U.S. banks. Unfortunately, this initiative is too little and much too late.
Two steadfast rules come to mind when characterizing successful payment offerings: survival of the fittest and time is of the essence. These days, consumer preferences play a pivotal role in determining which payment method will prevail while others fail. Here’s a rule of thumb - customers don’t like change. So they will opt for major modifications in their payment habits only if they are convinced that the shopping experience will be radically improved. After all, current payment methods are hardly stressful - pulling out a credit or debit card for payment is not particularly difficult.
Well, to quote another old adage, the road to hell is paved with good intentions. No one doubts that MCX had only the best of intentions.
Vlad Branin is vice president of professional services at Zooz.