This article appeared back in January 2013, long before CVS and Rite Aid pulled the plug on Apple Pay, and long before Apple Pay was even announced. There’s a lot to process here.
On the pitch to become a member of the Merchant Customer Exchange:
One example of the pitch approach some have cited: MCX demanding $30,000 from retailers just to see the official PowerPoint. (That slide deck must have some amazing images.) Although charter members were asked to kick in $1 million to join, retailers are being asked to give $500,000 or $250,000.Chains are also being asked to commit to three-year mobile payment app exclusivity, meaning they won’t support any non-MCX mobile payment other than any mobile payment app they have already deployed. (There’s a one-year grace period from the start of membership—where retailers can get out of the deal—and that period is about to expire for most of the initial backers.)
And:
One CIO of a major chain, who sat through the MCX salespitch (he declined to pay for the PowerPoint but the consortium showed it to him anyway—or at least a version of the slides), said he declined to join because of what he perceived as the sketchiness of the plan.
And this, on the difference in liability between the MCX-backed ACH approach and the credit-card approach (used by Apple Pay):
The question of whether there will be a credit card option is crucial. Although debit card transactions—especially at Walmart—are soaring percentage-wise, the risks to the consumer are light years less with credit cards and the associated zero-liability programs. In theory, a zero-liability program could be created for debit cards, but it would mean banks agreeing to not bounce any transactions until they had established that no fraud is involved.That’s because even if banks ultimately reimburse a shopper all monies stolen by thieves, the damage perpetrated by inappropriately bounced checks can be permanent and extensive. A credit card zero-liability incident grants a temporary credit, and the shopper is not hurt.
Also interesting is the idea that many merchants are involved specifically because of Walmart’s huge gravity well:
One retail concern that has haunted the group since its launch is the perception—with more than a little justification—that Walmart is playing an ultra-dominant role. Granted, other retailers are certainly involved, but Walmart began the effort and one of its executives—Walmart VP and Assistant Treasurer Mike Cook—is seen as the group’s de facto CEO. Some have come to jokingly suggest that MCX stands for the Mike Cook Exchange. The suggestion that many of the chains involved are there to closely watch Walmart (“keep your friends close and your enemies closer”) is still alive and well.
A fantastic read. [hat tip to Jim Neal]