On Tuesday it was reported that US mobile payments consortium MCX had postponed the rollout of its “CurrentC” solution and laid off numerous staffers, while repositioning itself to focus on financial institutions, rather than the retailers that it was founded to service. The long saga of CurrentC (our first post on it was back in 2014) is an interesting and important story for the mobile payments industry, and the company’s current pivot highlights a number of issues – and offers some key lessons – for everyone in and around the space, not least merchants and retailers.
The retailer consortium model as followed by MCX was inherently problematic. Much of the blame for the failure of CurrentC to make good on its initial efforts can probably be placed on the nature of the consortium itself, which sought to create common ground among otherwise fierce competitors. But even had the firms all agreed on the overall objectives and rough contours of CurrentC, it would still likely have suffered delays and other issues because of the need to clear major decisions with so many stakeholders. So while consortia can and do work – Cellum has successfully created mobile wallets for client groups including multiple banks and telecom operators – bespoke solutions for single firms or small alliances likely offer a greater chance of success.
Existing retailers can’t force customers into a single new, closed payment system. Arguably the first big mistake made by MCX was trying to prevent its member retailers from accepting Apple Pay. Of course, some world-class retailers have had success radically limiting their customers’ choice of payment methods (US club discounter Costco’s exclusive credit card deals are perhaps the most obvious example). But these are the exceptions that prove the rule that customers need to be given many ways to pay.
Mobile payments can’t just be about cutting card transaction fees. It is of course understandable for retailers to look hard for ways to whittle down the amount of their hard-earned margin that ends up going to transaction fees. But this alone doesn’t provide much of an incentive for consumers to adopt mobile payments – to put it mildly.
Financial institutions remain a crucial player in the mobile payments space. In part because of CurrentC’s original focus on cutting transaction fees, MCX spent years downplaying the importance of banks and other financial institutions in the creation of a successful mobile payments ecosystem. But now it is pivoting towards them. Enough said.
Being “technology agnostic” is more than a one-time pivot. After the launch of Apple Pay in 2014 MCX said it would be willing to support NFC payments in addition to QR codes, wrapping the change in the mantra of being “technology agnostic.” But the shift smacked more of catch-up than leadership, and may have left some partners wondering if it was a sign of weakness rather than strength.
If you are going to use QR codes, use them well. It’s no secret that among many consumers QR codes aren’t seen as a “killer app” for in-store payments, being slightly more balky and time-consuming than well-executed solutions using NFC. But QR is an excellent approach in remote payment use-cases, and CurrentC apparently never saw this opportunity. And this now looks like a major mistake, especially given that Apple Pay looks set to support web checkout by the end of the year, giving it another leg up on CurrentC.
Mobile payments may be a “long game,” but it is a fast-moving one. In announcing the postponing of CurrentC’s national rollout, MCX CEO Brian Mooney stressed that the mobile payments space is “just beginning to take shape.” While in certain regards this is indeed true, it is also true that some of the key contours of the mobile payments future have taken shape while MCX was working to implement its solution. Likewise, while we can’t yet say that there is genuine “commoditization” in mobile payments, it seems clear that, for example, Apple Pay’s eventual adoption of loyalty schemes cut into an early advantage CurrentC may have enjoyed. Either way, every company entering the mobile payments space needs to have a long-term view, but one which recognizes that, as with payments in general, in the mobile payments space sometimes speed trumps all.