The market learned in flash announcement in March about a consortium of leading merchants planning to build a payments network based on new mobile technologies. The rumor now is apparently reality as the situation has evolved into a brand called the Merchant Customer Exchange. At the core of the exchange is a “new mobile payment solution,” according to the group’s press release:
“Development of MCX’s mobile application is underway. The initial focus centers on offering merchants a mobile-commerce solution capable of seamlessly integrating a wide range of consumer offers, promotions and retail programs. The application will be available through virtually any smartphone.”
The group claims it is responsible for generating $1 trillion in annual sales volume. The statement essentially helps the group’s hat get thrown in the ring of emerging payment network development in the U.S. For the first time since the evolution of an electronic payments market, there are an increasing number of viable alternatives to the traditional global card networks including PayPal and Starbucks/Square, as well as potential entrants such as Google Wallet, Apple, Amazon, and even Microsoft.
Thinking of this as a merchant-only solution might obscure the fact that the value of networks is to connect issuers and acquirers, merchants and consumers. Tucked in this press release is this statement:
MCX intends to address the needs of financial institutions and merchants of all sizes to better serve consumers in the growing mobile marketplace.
This implies issuers are as much a part of this concept as acquirers, which raises the card network threat level in a way that previous developments have not been able to reach. If this group can enable a direct connect between buyer and seller, in order to process transactions on this new network, the card brands may have to become a participant. These are the kinds of changes taking place in the market today, which would have been unheard of just a few short years ago. Perhaps these changes can only be accomplished from outside the traditional boundaries of a large, complex industry like ours.
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