Aug 15 A group of big retailers that includes
Wal-Mart Stores Inc, Target Corp and Japan's
7-Eleven is developing a mobile payment network, adding to the
proliferation of options that let consumers pay with
The system, known as Merchant Customer Exchange, is a
retailer-led initiative that would match similar services from
Google Inc, which began operating its own system last
year on its Android devices.
The group of retailers, which account for about $1 trillion
in annual sales, wants to make sure it has a say in the
development of standards for mobile payments, Terry Scully,
Target's president of financial and retail services, said on
"What we are looking for is a broad, seamless experience
across all retail formats," Scully said.
Mobile payments are expected to rise nearly four-fold to
more than $1.3 trillion annually by 2017, a report from Juniper
Research said on Wednesday.
The group is in discussions with financial institutions,
technology companies and telecommunications providers to set up
a backbone for the payment system, Scully said, but he could not
forecast when the system would be in stores.
"While speed to market is important, we really are focused
on doing it right," Scully said.
The retailer group is joining a crowded field.
Earlier this month Starbucks Corp took on the
mobile payments model, employing Square Inc to process payments
at its U.S. coffee shops.
In May, eBay Inc's PayPal unit announced deals with
15 retailers to use its system for mobile payments.
"These big retailers are doing this because they are not
happy with the solutions being pushed on them by the market,"
said Rick Oglesby, a payments expert at consulting firm Aite
If these merchants can agree on a common standard for mobile
payments, the venture could grow very quickly, he added.
"This creates a big opportunity," Oglesby said. "A system
designed by merchants for merchants could have a big leg up over
The Merchant Customer Exchange is working on offering
merchants such as retailers, gas stations and restaurants a way
to integrate their promotions into the payment plan, which it
said would be available through virtually any smartphone.
The swift rise of mobile payment processing tools in recent
years has led some observers to forecast a future in which
wallets are left at home. That could transform retailing, but
also create security issues, particularly if mobile devices are
lost or stolen.
About a decade after they were dreamed up by engineers and
marketers, mobile wallets are still far from commonplace in the
United States, stymied by industry infighting, consumer tastes
and regulatory hurdles.
That has not stopped banks, phone makers and technology
companies -- fearful of being left behind -- from trumpeting the
concept and pushing the argument that any solution can succeed
if it speeds up checkout times, is secure and easy to use.
Shoppers abroad, especially in Asia, can already wave
cellphones at the check-out counter to pay for everything from
groceries to gasoline.
Now, a growing number of mobile operators, banks, technology
companies and card processing networks like Visa Inc,
MasterCard and America Express are vying to gain
a foothold in the still-small but high-potential U.S. mobile
Most mobile payments services, like those offered by Square
and PayPal, sit on top of the payment networks run by Visa,
MasterCard and American Express.
But these processing giants are working on their own mobile
payment services because they do not want to lose contact with
the consumer, Oglesby explained.
"Payments players use the term disintermediation - someone
is stepping in between them and the customer and adding value,"
he said. "Visa, MasterCard and Amex are worried that they may
become the raw materials that to go into the finished product -
and right now the finished product is looking like PayPal and
Three of the top U.S. mobile carriers - AT&T Inc,
Verizon Wireless and T-Mobile USA -
are also looking for bank and network partners to make their
Isis mobile payments venture grow.
Currently, credit card companies charge merchants
transaction fees - and mobile payment players like Square and
PayPal have to exact such fees too.
Other companies, such as AT&T and phone makers from Research
In Motion to Apple Inc, are likely to demand a cut of sales.
This puts U.S. retailers in the uncomfortable position of
possibly surrendering more margin.
Companies involved in MCX along with Wal-Mart, Target and
Seven & I Holdings Co Ltd's 7-Eleven include Alon
Brands, Best Buy Co Inc, CVS Caremark Corp,
Darden Restaurants Inc, HMSHost, Hy-Vee Inc, Lowe's Cos
Inc, Publix Super Markets Inc, Sears Holdings
Corp, Shell Oil Products US and Sunoco Inc.
The group said it planned to announce more members in the
The MCX system was reported late on Tuesday by the Wall