Walmart Pay and the Future of CurrentC
What’s interesting, other than the additional competition Walmart Pay brings to an already crowded mobile payments marketplace, is that Walmart has been involved in developing the Merchant Customer Exchange (MCX) mobile payment system, CurrentC, in an effort to avoid interchange fees associated with credit card networks such as Visa and MasterCard. The joint venture, announced back in August 2012, has yet to be released nationwide and is now being tested at select retailers in Columbus, Ohio. Jessica Deckinger, chief marketing officer at Merchant Customer Exchange, said during a December 1 House Energy and Commerce subcommittee hearing on mobile payments that the rollout of the payments service is “currently anticipated in 2016,” but provided no further details.
Retail’s effort to introduce its own payment system has stumbled from the get-go. Members of the retail consortium behind CurrentC disabled the NFC readers in their retail stores, depriving customers of the ability to use Apple Pay and provoking significant public backlash. The application, while still in development, has also been hacked, resulting in the release of e-mail addresses, though Deckinger did note during the hearing that MCX “immediately” isolated the hack and informed customers within hours of the breach. And, whether in a sign of growing frustration at the pace of development, the recognition that customers want to use other mobile payment options, or the expiration of contractual obligations with MCX, retailers, including Best Buy and RiteAid, have begun to accept additional mobile payment methods. This, in turn, led to the departure of CEO Dekkers Davidson, with Brian Mooney stepping into the role.
To be fair, hiccups are inevitable during the development of any product or service. Companies learn from them, correct them, move on, or go back to the drawing board. The bigger problem that MCX faces is whether its original founders have the wherewithal to maintain course. With Walmart entering the space, so goes the rest of large retail? If big-box retailers start pushing their own in-store payment applications, as well as designing loyalty programs associated with each app, would there be a need then for CurrentC? And with Walmart Pay allowing customers to upload their debit or credit cards, considering the interchange fees associated with such payments, has Walmart lost the battle with major card networks and thus distanced itself from one of the original reasons for CurrentC?
Given Walmart’s footprint, it’s not entirely surprising to see it take this route. Time will tell whether other large, big-box retailers follow with their own payment services. That being said, not every retailer is going to create its own payment app, and this is where CurrentC could shine. Companies associated with MCX have more than 110,000 locations across the U.S. and process more than $1 trillion in payments annually. With or without Walmart, CurrentC can survive on those numbers alone, assuming that a steady stream of customers are willing to use the payment application. “Smaller” retail firms are still likely to view the MCX consortium as beneficial to their interests, and it would be shocking, if not perplexing, if every retailer—no matter the size, customer frequency, or location—decided to go it alone and develop its own mobile payments feature.
Nevertheless, Walmart’s move is notable, not to mention timely. The addition of a mobile payments feature to the company’s app, despite being limited to in-store transactions, could take some momentum away from the plethora of mobile payment alternatives that currently exist. What happens with CurrentC will, in my view, be even more interesting to follow in the months ahead. Whether the retail consortium can stay together or what shape it will take could ultimately determine CurrentC’s success even before liftoff.