Is Best Buy just the first to leap from a sinking MCX ship?

A RetailWire discussion last October focused on whether retail members of the Merchant Customer Exchange (MCX) consortium were making a mistake by refusing to accept Apple Pay in an attempt to protect the group’s nascent CurrentC mobile payment system. A plurality of commentators said MCX members were wrong to try and keep Apple Pay out. Now Best Buy, a MCX member, has apparently come to the same conclusion. The chain will begin accepting Apple Pay in its U.S. stores later this year.





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While both Best Buy and MCX publicly stated the retailer’s continuing commitment to the consortium, this is a significant announcement. When Apple Pay first launched, MCX members CVS and Rite Aid disabled POS that would let customers use the alternative payment option. Having a high profile member of the group go over to the enemy camp, so-to-speak, provides a publicity boost for Apple.

While Best Buy said the company continues to invest in MCX, it did not offer assurances it would accept the CurrentC payment option once the system goes live. "We are actively monitoring their pilots," an unidentified Best Buy spokesperson told Re/code. "It’s too early to declare whether we will take it at launch."

Apple; MCX
Apple; MCX

A day after Best Buy’s announcement, CEO Dekkers Davidson resigned from MCX to pursue other opportunities. MCX has denied that Mr. Davidson’s resignation is in any way connected to the Best Buy news. Brian Mooney, a former CEO of Bank of America Merchant Services, will serve as interim CEO of MCX.

BrainTrust

"Each day that CurrentC isn’t rolled out is another day of people getting comfortable with Apple Pay. But even if MCX had beat Apple Pay to market (like Isis/Softcard did), I’m not sure it would have helped. Mr. Mooney needs to make sure the product is compelling to consumers, and he needs to move faster."

David Dorf



"Best Buy is doing what any good retailer would do, it is meeting the expectations of its customers. As a retailer of consumer electronics it, more than most, needs to be more open to any form of electronic payment. Additional retailers will follow as their customers invest in the technology that allows them to use all of the payment options."

Frank Riso

Principal, Frank Riso Associates, LLC


"MCX was destined to become just another verse in a familiar refrain. A group of constituents is using a service they find valuable — but source from a third party. The group begins to notice how much they are paying for that service. They notice the profits the service provider is reporting. And they grumble louder among themselves."

Ben Ball

Senior Vice President, Dechert-Hampe (retired)


Discussion Questions

What do you think the Best Buy announcement means for the MCX consortium and its CurrentC mobile payment system? What will Brian Mooney need to do as he takes over as interim CEO of MCX?

Poll

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David Dorf
David Dorf
8 years ago

Each day that CurrentC isn’t rolled out is another day of people getting comfortable with Apple Pay. But even if MCX had beat Apple Pay to market (like Isis/Softcard did), I’m not sure it would have helped. Mr. Mooney needs to make sure the product is compelling to consumers, and he needs to move faster.

Frank Riso
Frank Riso
8 years ago

Best Buy is doing what any good retailer would do, it is meeting the expectations of its customers. As a retailer of consumer electronics it, more than most, needs to be more open to any form of electronic payment. Additional retailers will follow as their customers invest in the technology that allows them to use all of the payment options.

In order for MCX to survive Brian Mooney will need to convince the group that the “times they are a’changing” and to accept the new forms of payment. Will the consumer select retailers based on which payment they accept? That is the real question. I think not, but time will tell.

Paula Rosenblum
Paula Rosenblum
8 years ago

Well, Apple Pay and its tokenization technology and app-less requirement has changed my opinion about mobile payments in general. I think they have a real shot.

At the same time, my feelings about MCX remain pretty much the same. What’s in it for consumers? The only thing we know is that it’s a good opportunity for the consortium members to save money on interchange fees. But you have to allow the app access to your bank account via a debit card, it’s an app and from what I’ve seen so far, a clunky one at that.

I know there has been a fair amount of conversation about combining loyalty card information, but I imagine Apple’s not so far from there, nor is Google Wallet.

It actually was never logical to me that a chain selling technology wouldn’t use the best technology for checkout. My only question is, what were they thinking of in the first place by joining the consortium?

I just don’t see CurrentC going anywhere except perhaps Walmart, CVS and Rite Aid. And while they may save on interchange fees, the cost to incent people to use the system will be promotions that will not be insignificant.

Mark Heckman
Mark Heckman
8 years ago

MCX had a good idea and a nice consortium of clients, including the world’s largest retailer, but launching a private-label mobile payment system requires efficient technology, scale and consumer support. Apple Pay has a distinct advantage in all three areas.

If MCX has a shot at competing in this space, they need to hold on to their retailers and launch something that retailers and consumers can actually embrace and soon. I think there is room for several players, but the train has left the station and consumers are building rapport with a key competitor.

Adrian Weidmann
Adrian Weidmann
8 years ago

In the end, the digitally-empowered shopper will always win. It is naive for any retailer in today’s landscape to believe that they will control the how, when and where she will make her purchase. The digital landscape is in many respects the great equalizer where we as shoppers can forge how the successful retailers and brands serve our expectations. Best Buy’s decision is based purely on economics. Shoppers want to use Apple Pay, so you accept Apple Pay. Consortia are often designed to control and dictate a point of view for their benefit. Yes, Apple in many respects is its own consortium but let CurrentC prove it’s a better process for both the shopper and retailer. In the end the shopper and her wallet will prevail.

Gene Detroyer
Gene Detroyer
8 years ago

In the end this will be the customer’s decision. It is pure hubris for a retailer to think otherwise. If you want your system to win, you make a better system. By denying the competition, you are denying the customer and you will lose in the long run!

Ben Ball
Ben Ball
8 years ago

MCX was destined to become just another verse in a familiar refrain.

A group of constituents is using a service they find valuable — but source from a third party.

The group begins to notice how much they are paying for that service. They notice the profits the service provider is reporting. And they grumble louder among themselves.

Someone at an industry convention finally says “we can do that for ourselves” and a committee is formed to develop a wholly owned subsidiary to perform the service — but they have no expertise and no capabilities.

The service fails.

The members begin to defect.

The whole thing goes away and is never spoken of again at industry conventions.

Thus ends the verse.

Gordon Arnold
Gordon Arnold
8 years ago

This is an interesting observation at best. The need to include factors like transaction fees versus the need to allow for increased customer purchases might be interesting in this assessment. I would also like to know if Apple included any incentive(s) to Best Buy as a means of growing their end of the business. This technology needs a lot of support from the paper side of the business, or should I say banks. Apple’s vision of doing things in a way that maximizes their profit-taking ability has run face-first into big business once again. This is how and why the Apple company has evolved into a massive gadget manufacturer instead of a significant market mover and innovator.

Cathy Hotka
Cathy Hotka
8 years ago

MCX was a great idea, but progress was way too slow. A few years from now we’ll probably see MCX as a lost opportunity.

Lee Kent
Lee Kent
8 years ago

Perhaps my thinking is too simplistic, however, just as retailers need to accept VISA, MasterCard, AMX, etc, so will they need to accept various forms of electronic payments.

It’s all about the customer right?

Smart move on the part of Best Buy. For my 2 cents.

Roger Saunders
Roger Saunders
8 years ago

We’re well past the era of a merchant being able to say, “You can have any color car, as long as it’s black.”

Consumers in the U.S. are familiar and comfortable with competition. While the lads and lasses in Washington D.C. may be the guilty parties in taking competition out of the payment system, Retailers don’t have to follow that path. Retailers are NOT a utility, and they don’t need this “protection.”

Get over it, and begin to move forward. The consumer is waiting, and is expecting some efficiency and savings that will benefit them.

Mike B
Mike B
8 years ago

Anything that got customers more comfortable with paying by phone is a positive. If MCX was going to provide such a great consumer benefit from use, it could have swayed Apple Pay users to use the service just like it would sway physical card users from using the service.

MCX making retailers disable tap/contactless was stupid from the start. I know of at least 4 MCX Members who still accept tap/contactless also; I had transactions using tap/contactless at a few of them just last week. Rite Aid and CVS have disabled tap/contactless yet both have recently installed new pinpads in their stores that still have the tap/contactless feature and will even read a card, just not process that way.

I have no problem with the concept of MCX but what I have a problem with is the way they are forcing their “members” to disable the tap/contactless payment function. This is a proven efficient, secure method of payment; it processes faster and has been used with great success in other countries both in physical cards and in other devices for small ticket transactions.

Thanks to MCX, many banks have stopped offering contactless/tap enabled physical cards which are an important piece of making transactions more efficient when a chip is used instead of a swipe (chip transactions take quite a bit longer to process than swipe). MCX has screwed up the entire payment processing and chip roll out in the US with its practices. And for that they deserve to fail.

Kai Clarke
Kai Clarke
8 years ago

This really hurts. However, it begs the real question as to why can’t everyone just get along? Many retailers accept Visa, MasterCard, and Amex…why can’t this be the same for mobile payment systems?