Light Reading

Retailers Join to Boost (or Fragment) mCommerce

Sarah Thomas

12:25 PM -- Wal-Mart, Best Buy, 7-Eleven and Target are among the big-name retailers teaming up to take on the wireless operators and Google (Nasdaq: GOOG) in the crowded mobile commerce market.

The companies, along with 11 others, announced the formation of the Merchant Customer Exchange (MCX) on Wednesday. The venture plans to build a mobile app that will let customers make payments, redeem coupons and rebates and store their loyalty program information on their smartphones.

When I saw this news, I thought, "Great, the retailers are an important piece of the value chain for mobile payments." But, then I realized that the MCX is being positioned as a competitor to Google, operator initiatives like Isis and even Square Inc. and other credit-card company services, rather than a link in the chain. Now, it just seems like yet another half-baked solution in an increasingly congested market. (See Mobile Commerce Sidesteps the Carriers , Learning to Play Nice With NFC and Verizon Blocking Google Wallet? Poor Decision.)

Sure, the retailers -- which do a combined $1 trillion in yearly sales -- are powerful players since they own the point-of-sale and decide what credit cards to accept. But, it seems to me they would be much better off working with other players in the market to make existing services more robust and, importantly, widely accepted. (See Mobile Money: What's the End Game? )

I understand that everyone -- wireless operators, software companies, handset makers and vendors are guilty too -- wants to be the mCommerce leader rather than just one part of the puzzle, but it's frustrating to see the market becoming so fragmented before it has even taken off.

— Sarah Reedy, Senior Reporter, Light Reading Mobile

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12/5/2012 | 5:23:49 PM
re: Retailers Join to Boost (or Fragment) mCommerce

This makes sense to me.  You see it as fragmentation, I see it as retailers finally controlling thier own fate.  MCX will most likely be ran as a non profit or minimal profit organization.  This could potentially give the retailers at least $10 Billion more in profits.

Typical Visa/MC/AMEX and I suspect mobile providers/Google take 3-5% of sales.  MCX with no profit motive could likely do this for no more than 2%.  Leaving at a minimum 1% or $10 Billion in the retailers pocket.

Plus they plan to make this an all inclusive app that has store coupons, loyalty program etc.  Mobile operators like Google/VZ/ATT are only interested in taking a cut of the sales and not in their loyalty programs or coupons leaving this to others to handle.  I believe the average consumer would prefer to have single app that does everything for them with retailers and not have to deal with multiple apps.

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