Today we see in the press that most of the employees have been let go, and TechCrunch predicting “MCX to focus on Bank Deals”. Translation: MCX is dead, but we got a sweetheart deal from Chase on free payments (ChasePay) and discounts on all chase branded cards.. so we will keep the shell of MCX alive to capture these discounts (seem my ChasePay blog). I believe Target and WMT will accept ChasePay in 2 yrs (after they complete their custom POS/CPT switch work….).
MCX was a great idea.. I’m not joking. Retailers “touch” consumers far more often than the average bank, and they must deliver value in every interaction (as stickiness is low). Retailers are in a unique position to unlock value (ie coupons), use transaction data AND create great in store experiences. My personal bets are all lined up behind retailer friendly value propositions…. MCX is not alone in failure.. (yes I have blogs for each one).
- Google Wallet $600M+
- SOFTCARD/ISIS $600M+
- Paypal POS/Paydiant $400M+
- Bank Led Paydiant Consortium – $800M
- Card Linked Offers – $1.5B
- LevelUP/Tabbed Out/
- Shop Kick, ….
The history of MCX is not linear.. it involves many starts and drivers across current and former participants. I’ve traced itself way back to the early days of mobile 2008/9 with Discover, Barclays, Verizon, GE Money/SYFS.. all had some early involvement here. Payment was always the core focus.. it is the common thing that 60 fierce competitors all agree to collaborate on. The problem is that payment has no value proposition.. none of us leave the store today without our merchandise because the retailer didn’t take our form of payment. Wallets must have a value proposition that expands beyond payment. My good friend Dekkers knows much more about mobile, retail, and payments than I do.. and saw this early. But it is very hard to pivot a consortium of competitors from payments to the area they compete.
While payment is a common “infrastructure service” that all retailers agree to reduce.. marketing and data are NOT common services.. The mechanisms Retailers leverage to engage consumers, use data and market products is the core of retail competition (see my WalMart Pay Blog). Target is the leading payment innovator in retail.. by far. The entire MCX product began to resemble Target RedCard. However Target’s real advantage was Cartwheel… (see my video overview). Redcard was good, Cartwheel made it great. How many other retailers could create a Cartwheel from Scratch?? This made for a dynamic where MCX was the [small] payment ingredient in many custom mobile experiences..
Walmart and Target marketing/mobile teams were the principle teams guiding mobile decisions.. with MCX taking the much smaller payment only role. The launch of Walmart Pay is certainly what killed MCX (in my view). I think Walmart’s mobile/marketing team is 100% right for making this decision.. but it had huge implications. The CORE TENANT of MCX was NO CARDs and nothing about 35-50bps in cost of payments. Walmart Pay allowed the consumer to pay however they wanted to..
Future? While there is a small 10% chance, that MCX will indeed jump on board the Apple and Bank backed Clearxchange remake.. I think that it is likely to remain largely a payments routing shell with core LCR assets at FD and FIS focused on debit routing (and chase credit discounts).
Lessons learned for MCX are similar to those learned by Google, ISIS, Banks and others:
- Payments is a poor place to start a mobile value proposition
- Merchants are best placed to unlock value, and mobile is core competitive differentiator (Target Cartwheel, Walmart Mobile, …)
- Retail, banking, mobile, consumer behavior are all undergoing tremendous change… with much experimentation. Small teams are the only construct capable of supporting the pace of change.
- Consortiums need to move fast to establish first success and internal momentum… Starbucks offered MCX the option to use everything they had back in 2011.. Where would MCX be if they had started with something that worked and consumers knew…
- Chase learning: while there are many better ways to design a payment system, there is NO WAY to earn more money than sticking with the existing networks. Also watch out when you bend over to win business.. you might get stuck in that position.
- Paypal.. Paydiant arghhh.. What was a periphery app that retailers would give to 3rd party.. is becoming core “must have” with large retailers building their own. Paydiant will be alternative for next tier.