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Another Mobile Wallet? Are You Kidding?

MCX Retailer Mobile Wallet

The mobile wallet market is rapidly starting to resemble the wallet George Costanza used in Seinfeld – so full and cluttered that instead of making things easier on the user, it’s actually creating confusion and causing pain.  I mean even after the array of mobile wallet launches we’ve seen in recent months, they just don’t stop trickling in.  The latest is a team effort from more than 12 of the nation’s largest retailers – including Best Buy, Target, and Wal-Mart – and the question is, do they have what it takes to claim the crown of King of Mobile Wallets?

The group of retailers – which also includes the likes of 7-Eleven, CVS, Darden Restaurants, Lowe’s, Shell, and Sunoco – announced last week the creation of a joint company called the Merchant Customer Exchange (MCX) with the express intention of creating mobile commerce tools that offer shoppers convenience as well as deals targeted to their spending habits.

“MCX will leverage mobile technology to give consumers a faster and more convenient shopping experience while eliminating unnecessary costs for all stakeholders,” said Mike Cook, corporate vice president and assistant treasurer at Wal-Mart, in a statement announcing the company’s formation.  “The MCX platform will employ secure technology to deliver an efficiency-enhancing mobile solution available to all merchant categories, including retail stores, casual dining, petroleum and e-commerce.”

Hold on a second there buster, you might be thinking.  That sounds awfully similar to what all the other mobile wallet companies have already promised, and we haven’t even really seen what they have to offer yet! What makes you so sure that people are even interested in your currently intangible new product?

Don’t worry, Mr. Cook, I’ll field that one. The fact that mobile wallets are largely still in the idea phase means that none has yet really taken control of the market.  Sure, you may have heard of Google Wallet, Visa’s, or Isis from the big cell phone carriers, but do you actually know people using them?  Probably not many.  In other words, there’s still ample opportunity to claim supremacy in a quickly emerging market.

The ultimate prize – the combination of vast stores of consumer data and new ways to market products to consumers – is worth the dubious odds of success, it seems.  What mobile wallet purveyors can learn about consumers’ spending and payments habits is potentially much more valuable in the long run than what they’re investing now or any exclusive deals struck later with cell phone companies or payment processors.  It could lead to drastically more effective advertising, increased sales, strategic advantages over the competition, etc.

MCX certainly has a few things going for it in this competitive sweepstakes as well:

  • Critical mass:  The combined annual sales of the merchants making up MCX are said to be around $1 trillion, which indicates that they already have the customer base to make their mobile wallet successful.
  • Home field advantage:  Retailers are in control of which mobile wallets they accept and which they do not.  Anyone who doesn’t play by their rules (or who doesn’t have enough leverage over them) will be unable to gain traction in the market.
  • Unique deals:  Now that the merchants have a dog in the mobile wallet race, so to speak, it’s unlikely that they’ll be eager to offer deals at their stores through other providers.  Without the incentive provided by discounts and special offers at the nation’s most popular retail establishments, other mobile wallet companies will find it a lot harder to get consumers to use their products.

Ultimately, whether it’s MCX or any combination of the other qualified entrants into the market that end up atop the mobile wallet mountain, they had better hope that the confusion created by the dizzying array of different products launched during the climb to the top doesn’t turn consumers off, prevent adoption, and transform the mountain of profits they predict into a mere mole hill.  Only time will tell.

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