Among the talks given at Money 2020 last week, the keynote by Dekkers Davidson, CEO MCX was top on the list for many delegates.
The Merchant Customer Exchange, better known as MCX, is a membership group backed by a growing group of the largest retailers in the US and is positioned to be one of the key disruptors of the payment processing system. Self styled on their website as “the only merchant-owned mobile commerce network built to streamline the customer shopping experience across all major retail verticals”, MCX has operated under a tight veil of secrecy since its inception. Anticipated in the context of the transparent presentations given by the CEO’s from American Express, Discover, FiServ and Visa at the conference, industry pundits hoped the talk might be equivalent to a coming-out party for the payments group.
Dekkers acknowledged the skeptics in the audience by saying “We’ve been talked about, laughed at, attacked. It’s all to be expected when you are challenging the status quo”. He went on the say that the Boston based company has about 100 full time employees at this point and has developed a partnership team that spans all sectors of the payments space.
The MCX objective, according to Dekkers, is to directly connect merchants and consumers to create deeper relationships. Forging these trusted relationships can be a challenge however when application security is brought into question. The mobile app developed by MCX, known as CurrentC, was recently targeted by hackers who were able to steal a number of email addresses from program participants.
EWeek reported that Dekkers addressed the breach in a press conference held October 29, 2014, saying that many of the email addresses stolen were “dummy” accounts used for testing the CurrentC app, and were obtained from an MCX email provider, not from the company itself. In the press conference, MCX stated “We take the security of our users’ information extremely seriously. MCX is continuing to investigate this situation and will provide updates as necessary.”
The trouble with the explanation is that perception often wins over reality, and most consumers probably don’t follow the nuances of a breach, only making a mental note that a breach occurred. In a Bloomberg interview, Double Diamond Group president, Todd Ablowitz, stated that the recent breach may cause long-term negative feedback for mobile payments among the general population. “If you’re launching a new payment system, you have to project a sense of security and gain confidence,” Ablowitz said. “If I was in charge of MCX, I’d be worried about how it appears to the typical consumer.”
Many in the audience expected Dekkers to address both the recent breach as well as published reports that two of its supporting merchants, CVS and RiteAid, had disabled the NFC feature on its point-of-sale equipment, meaning that competitive mobile payment solutions could not be accepted in their stores. Dekkers addressed neither topic directly, instead focusing his comments on what it will take for the mobile payment solution to be successful.
In this regard, Dekkers made note that there’s “Gotta be compelling reasons to change habits” and that a winning solution must “Provide personal benefits that will be compelling, they must save me time, money, not just a little, but a lot.” Dekkers stated that the payment system today is “built on friction” and that digitized receipts will add simplicity and convenience to consumers, in turn influencing where people like to shop.
Dekkers addressed the perception that MCX is building a closed loop payments solution. He said that multiple forms of payment will be accepted and eventually open loop credit cards will be processed via the app, though these types of transactions represent just 30% of the total for participating MCX merchants. He also mentioned that his solution would provide services that will be appealing both to the underbanked needing a prepaid card and for Millennials, though he did not elaborate on the MCX strategy to appeal to Generation Y.
Turning to security in a general way, Dekkers emphasized that solutions providers must put consumer data privacy and security front and center in order to create trust and build widespread adoption. He said that with MCX, no information will be stored on the mobile handset itself and that dynamic QR codes will be used to interface with payment terminals and e-POS machines. Transactions will take place in a “secure cloud”. Consumers using MCX can elect to remain anonymous to the merchant and he squashed rumors that a drivers license or social security number would be required to register for the service.
The last pillar for success shared by Dekkers was that mobile solutions must find a way to be widely accepted by merchants. Supporting his strategy, he shared that MCX will work on mobile handsets representing 93% of devices that are in the hands of customers today.
Dekkers wrapped up his talk by acknowledging “We live in interesting times” and that “If you want to change the status quo, you have to challenge the status quo.” Whether skeptic or supporter, his final statement was easy to accept for all delegates in this 4,000+ person gathering in the main hall – “consumers will determine the winners“.