In the point of sales (PoS) processing arena, mobile payments are disrupting the status quo and requiring many business sectors to adapt quickly.

Apple and Google are the early entrants currently dominating this space with their Apple Pay and Google Wallet apps. These solutions allow consumers to pay for products and services at brick & mortar retail locations by utilizing Near Field Communication (NFC), which transmits financial data generated on the app (from a mapped credit card) on the customer’s phone, to the retailers’ NFC processor.

Apple Pay and Google Wallet have the luxury of being available to any merchant/retailer that chooses to take advantage of this payment system.  However, a group of retail companies have formed a consortium under the Merchant Customer Exchange (MCX).  This collective group of vendors is “the only merchant-owned mobile commerce network built to streamline the customer shopping experience across all major retail verticals.”

Companies participating in MCX include: 7-Eleven; Alon Brands; Best Buy; CVS Health; Darden Restaurants; HMSHost; Hy-Vee; Lowe’s; Michaels; Publix; Sears Holdings; Shell Oil Products US, Sunoco; Target Corporation; and Walmart.

MCX’s mobile solution is known as CurrentC. Unlike Google and Apple, CurrentC debits money directly from an account, primarily to avoid credit card fees, and utilizes Bluetooth and QR coding technology, among other things, rather than the more secure NFC.

While Apple Pay (estimated 3 million users) and Google Wallet (estimated 16.8 million users) are enjoying steady (though somewhat, modest) integration into the retail payments’ arenas, adoption rates for CurrentC – released in beta at end of 2015 – are far from impressive.

Here are a few theories that may explain why:

1. A little late to the party

ApplePay and Google Wallet are established brands with superior name recognition. They do not have to devote resources to educating consumers about who they are.

MCX/CurrentC, on the other hand, has to dedicate significant time and resources to this effort while also spelling out their differentiators and associated value proposition. Consumers are far more likely to put their faith in well-established technology behemoths, which creates a real obstacle for MCX to overcome.

2. 2014 database hack & negative press

CurrentC’s pilot program was hacked in 2014 and customer emails were compromised. Not ideal for instilling confidence, the issue received unfavorable press in the Wall Street Journal, Time Magazine, and elsewhere. Given the ongoing rash of retail hacks (either in the cloud or in server warehouses), this may create concerns for consumers. ApplePay, by contrast, appears safer (with tokens and scanned fingerprinting protocols).

There is also the perception by many potential users that CurrentC favors retail marketing efforts at the expense of consumer protection, since captured data is used to identify customer preferences and individual savings opportunities as well as drive coupon offers.

Even more negative press was received when companies such as CVS and Rite Aid de-activated NFC processors because of their participation in the MCX consortium. Many participant retailers have since re-activated this, allowing their patrons to potentially pay with Apple Pay, or Google Wallet highlighting the broader appeal of the two.

3. Payment technology is evolving very rapidly

Even as mobile payment solutions continue to evolve, alternatives are being developed. Cloud-based, online phone check-out (prior to even entering the store) makes in-store mobile payments less attractive. And retailers like this option because there is a greater propensity for consumers to impulse shop when on-line.

This is especially favored with quick-serve restaurants:

  • Dominos – 50% orders
  • Pizza Hut – 40%
  • Starbucks – 20% of orders and 2 million downloads (in only 3 months’ time)

4. Mobile Payment adoption rates declined between 2014 and 2015

There has been a decline in overall mobile payment usage, according to Mobile Payments Today – State of the Industry survey released Jan 18, 2016.

In response to the question – “Have you used your mobile device to make a purchase in a store (i.e. PayPal, Google Wallet, Softcard, Apple Pay, etc.)?” – the “no’s” are on the rise:

2014: No – 79%, Yes – 21%

2015: No – 83%, Yes – 17%

In other words, the jury is still out on the viability of MCX providing a competitive and well-adopted alternative POS solution for its retailers. And, obstacles abound both internally and externally.

Larger retailers – such as Walmart and Target – have considered going it alone, as their base is large enough to exist without being associated with the other participants, but this chips away at the attractiveness of the solution with their absence.

What’s more, the appeal of Apple Pay and Google Wallet may simply prove to be too formidable for CurrentC to overcome.

In short, the road ahead of CurrentC appears to be an uphill climb. Whether or not that hill is insurmountable remains to be seen.

Image Source (Creative Commons): dave.see.