As more big retailers such as Kohl’s and Circle K hop on board with Merchant Customer Exchange to create a central mobile payments solution, the company is also cozying up to small merchants to create a bigger list of retail partners

Since announcing plans to launch last year, MCX has been partnering with some of the biggest retailers, including Walmart and Target, to create a universal mobile payment system that can be used by multiple retailers. At the same time, the company also wants to involve smaller retailers to capitalize on the growing mobile payments trend.

“We are seeing smaller [marketers] come in who want to use MCX,” said Jeremy Mullman, a spokesman for MCX, Dallas, TX. “These folks are not giant national names. As we get closer to market you will see more of that.

“They think about mobile payments and want to catch on with it, too,” he said. “If customers are conditioned to pay on their smartphones, the smaller retailers want to be sure that they can take payments too.”

Small retailers hop on board
MCX is a company that was formed last year to develop a versatile mobile payments experience that integrates with retailers and brands’ point-of-sale systems.

Big retailers have been some of the first to invest in mobile payments because of the lower costs and the opportunity to change the in-store experience.

Now that MCX has amassed a group of more than 30 retailers that operate 90,000 stores and bring in $1 trillion in yearly payments, there seems to be a bigger opportunity for small retailers to latch on as well.

Small merchants have been in the mobile payment space for quite some time as well using point-of-sale services such as Square, Intuit and PayAnywhere, but the fragmentation in the mobile point-of-sale space continues to grow.

The proposition for small merchants with MCX is to consolidate the number of payment options for consumers that often also shop at big-name retailers and restaurants.

Big brands that support MCX besides Target and Walmart also include Best Buy, Chili’s, Dunkin’ Donuts, Gap and Kmart.

However, one of the more interesting brands to drop its support of MCX in the past year is Walgreens.

Over the past year, Walgreens has built up its mobile initiatives specifically around integrating its loyalty program with Apple’s Passbook, pointing to the mobile opportunities that retailers still have within their own stand-alone initiatives.

“For a retailer that doesn’t have anything, [MCX] could be an attractive option as opposed to creating their own solution,” said Scott Michaels, executive vice president at Atimi Software, Vancouver, British Columbia, Canada.

“The main driver is that this has to be so easy, and it has to be faster than pulling my credit card out of my wallet,” he said.

The waiting game
Without an expected roll-out day, MCX is clearly taking a different approach than other mobile payment services such as Google Wallet have taken.

The company is likely taking its time to develop a solution that not only scales but can also be adapted by consumers quickly.

“Companies are realizing that mobile payments are not easy, and to do them right will take time,” said Jordan McKee, analyst for Yankee Group, Boston.

“MCX has not been moving quickly, but there is a good reason behind it waiting,” he said.

At the same time though, the company cannot learn what works and does not work when its product is not in market.

MCX was announced in the fall of 2012, and since then the mobile payment space has only grown and become more fragmented. This means that by the time the service rolls out, it might already be behind other companies that have been testing and learning.

Some industry experts predict that MCX will roll out in fourth-quarter of this year.

Mobile payments
Although no rollout date for the program has been named so far, the vendors that will power the technology have been announced and give marketers a sense of what the service will look like.

Gemalto will power the front-end portion of the app and will focus on the user experience, and FIS will power the back-end portion of the solution.

According to MCX’s Mr. Mullman, the companies will build out a bar code and cloud-based system, meaning that near-field-communication will not be included in the rollout.

Given that the majority of smartphone devices do not include NFC, the goal behind the technology is to work on as many point-of-sale systems as possible.

However, Gemalto also enables NFC payments, which shows that MCX might be set out for the long term and can incorporate promising types of mobile payments that are not mainstream yet.

“I think when MCX hit the scenes, it seemed a bit far-fetched, but it seems like it is starting to gain more credibility with more synchronized goals that are more transparent,” Yankee Group’s Mr. McKee said.

Being able to layer in loyalty programs and coupons will also have to be a big portion of MCX to persuade brands to incorporate the technology.

“Consumers don’t just want another way to pay, there’s a tremendous opportunity with loyalty,” Mr. McKee said.

“Essentially if the end user does not see any value in MCX it will be a huge flop,” he said.

Final Take
Lauren Johnson is associate reporter on Mobile Commerce Daily, New York