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Apple Pay vs. MCX: Which has bigger potential in mobile payments?

It has been a couple of big weeks for mobile payments with MCX announcing its first pilot program last week and the highly anticipated unveiling of Apple Pay taking place earlier this week. While MCX is the brainchild of the some of the largest retailers in the United States and retail buy-in is one of the important factors in the success of a mobile wallet, Apple boasts several other key advantages.

“Apple Pay should have a bigger impact since more and more merchants will sign on as consumers adopt the new iPhones,” said Drew Sievers, former CEO at mFoundry and now founding partner at fintech investor Operative Capital.

“Simply put, people are more excited about Apple as a brand than they are about 7-11,” he said.

“Ultimately, consumers will be the ones in control. If they choose Apple Pay en masse, then the merchants will have no choice but to follow.”

New landscape
With the introduction of Apple Pay and MCX, the already competitive mobile payments landscape is being rewritten. While PayPal is the current leader, others such as Google Wallet and Isis have been struggling to gain traction.

All are likely to feel the heat from the newcomers, especially Apple, and may be readying their own answers to these developments.

One of Apple Pay’s key advantages is that it the company already has millions of consumers credit card information already on file through iTunes, thereby making enrollment and use easy for consumers.


MCX’s CurrentC digital wallet

Apple Pay also benefits from Apple’s strong brand image with consumers and that it works with existing credit cards.

The unknown
MCX, on the other hand, is an unknown entity to consumers.

“By and large, people like their existing credit and debit cards,” Mr. Sievers said. “Getting them to switch from an existing card to a new MCX card will be a significant challenge.

“Apple’s control over their hardware, software, and an existing payment source puts them in a much better position than MCX,” he said.

Apple Pay will be available in the new iPhone 6 and Apple Watch devices.

In the past, Apple users have quickly migrated over to the new iPhone once it becomes available. If the same happens this year and given that Apple Pay is being integrated by a number of merchants, including Macy’s, McDonald’s, Sephora, Subway and Walgreens, its impact could be felt quickly.

The major payment networks and leading banks such as Bank of America, Chase and Citi are also supporting Apple Pay.

MCX, on the other hand, is currently in a limited pilot and will be rolling out more broadly next year.

“We don’t have enough details on MCX’s offering, since they are holding their cards very close to the vest, so it’s too soon to speculate on their success,” said Nathalie Reinelt, San Francisco-based analyst at Aite Group.

“MCX has several big box merchants signed on, but will need to get the word out about their mobile payment platform to consumers,” she said.

Room to grow
While Apple and MCX are shaking up the mobile payments industry, it has by no means become a two-horse race.

For example, one of the challenges faced by Apple Pay include that it only addresses iOS users, meaning all those Android users are still up for grabs.

While Google Wallet has not caught on in any significant way to date, there is still an opportunity for it to play a more meaningful role.

“MCX may, or may not, survive long-term,” Mr. Sievers said. “Google is still well positioned to be successful given their control of the operating system, payment credentials, and hardware.

“I’d be surprised if they weren’t working on a response to Apple Pay,” he said. “Ultimately, Google and Apple should be in the strongest position to facilitate the mobile payments market.”

While not all the current players are likely to survive, the space will support several players.

“One thing that everyone needs to remember is that consumers want options,” Ms. Reinelt said. “Just like in their physical wallets today, consumers will decide which digital payment instruments will work best for their lifestyle.

“Apple Pay will do very well as a result of their mobile payment integration with their hardware, their brand recognition, and consumer trust,” she said. “MCX has the potential to do well as a result of their merchant partners and reported loyalty offering.

“However, there are many other mobile payment providers on the market who are also coming up with creative ways to transact via mobile and we should not count them out just yet.”

Final Take
Chantal Tode is senior editor on Mobile Commerce Daily, New York