Can MCX make contact as contactless wallets, cards take off?
As contactless payment cards finally begin to take off in the United States, a failure by retailers to partner with leading card networks for the MCX CurrentC mobile wallet is shaping up as yet another problem for the already struggling solution.
The number of mobile wallets using contactless technology is expected to reach 200 million by the end of 2016, up more than 100 percent from the end of 2014, according to a new report from Juniper Research. Contactless mobile wallets are likely to gain ground at the same time as contactless cards do in the United States as the deadline set by payments companies approaches for having the necessary terminals in place.
“The best that could be said of [MCX] is that it’s ‘drowning with no sign of a lifeguard,’” said Dr. Windsor Holden, head of forecasting and consultancy at Juniper Research.
“It’s difficult to see how it will be able to gain any kind of traction given its own internecine disputes over strategy, delays in launch and the lack of a major credit card partner,” he said.
A series of missteps
MCX is a consortium of big-name retailers that has been developing its own mobile payments solution.
However, there are signs that it is struggling, including a delayed launch and the fact that several retailers have started accepting Apple Pay. This is a change in approach, with member retailers originally agreeing to accept MCX’s CurrentC exclusively.
MCX appears to have also made a mistake by choosing to focus on store brand payment cards as opposed to partnering with the card networks.
As a result of these missteps, by the time MCX launches, U.S. consumers will have a choice of possibly half a dozen other mobile wallets, an increasing number of which will also have contactless payment cards.
“The initial decision to act as a closed shop with regards to other contactless payment methods [was a mistake],” Dr. Holden said. “Consumers don’t like to be told how they can and can’t shop – that was how the major stores lost out to the online players 10 years ago.
“Second, not getting an agreement with one or more major payment cards and deciding that they would rely solely on own brand credit cards and loyalty cards,” he sad. “That consigned them to the margins at the outset.”
Contactless makes contact
Juniper’s research found that while person-to-person services have historically driven growth of mobile wallet use, the launch of Apple Pay last year initiated a surge in activity in the contactless arena.
With public awareness of contactless payments on the rise, this will benefit Samsung Pay, which recently launched, and Android Pay, which is expected to launch soon.
The report, Mobile Wallets: Contactless & Remote Payments 2015-2020, highlights how numerous banks are partnering with Visa and MasterCard to implement branded contactless wallets using a cloud-based secure element.
Other findings include that wallets run by wireless carriers continue to fare badly, with Weve in Britain dropping plans for a wallet and Softcard folding in the U.S.
In developing markets, Juniper reports there has been a significant upscaling of wallet usage for savings and loan disbursements, while more than 100 million are now in use for micro-insurance.
“The US is rather different to most European markets, in that only with EMV will contactless cards begin to gain traction – in Europe, contactless cards have seeded the market,” Dr. Holden said. “It’s likely that the US will see the two develop in tandem.”
Chantal Tode is senior editor on Mobile Commerce Daily, New York