A consortium of national retailers including Wal-Mart, 7-Eleven, Target and Sunoco that earn a combined $1 trillion in annual sales announced this week that they will jointly develop a mobile-payments network called Merchant Customer Exchange.
MCX, as it is known, will enable payment by smartphones and compete with Google Wallet, Visa (V.me) and MasterCard (PayPass) rival systems gaining traction in retail locations including coffee and tea vendors.
Isis, a joint venture of AT&T, T-Mobile USA and Verizon Wireless, in March was approved for payment by smartphones by four payment terminal manufacturers — VeriFone, Ingenica, ViVOtech and Equinox Payments.
Starbucks Corp. is an early-adopter in accepting mobile-payments. The company recently announced it will invest $25 million in Square Inc. and expects to use its technology to eventually process all credit and debit transactions at its 7,000 U.S. outlets.
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A report in the Wall Street Journal, noted “mobile-payment transactions are expected to surge to an estimated $600 billion world-wide by 2016, up from $172 billion this year, according to market-research firm Gartner Inc. A Federal Reserve report in March said 87% of Americans have a mobile phone. Nearly half of those are smartphones, cellphones with computer applications and Internet access.
Among people with a mobile phone and bank account, 11% used mobile payments in the previous year, the survey found.
While few shoppers use their phones as mobile-payment devices, industry executives are convinced that consumers eventually will be just as comfortable buying with their phones as they now are when using credit cards and debit cards, the Wall Street Journal reported.
It is unclear which mobile-payment system will prevail.
Google and telecom providers know far less about shoppers' buying habits than the merchants do, they say.
"We're open to all partners, but it has to be beneficial to member merchants in a way that improves the system and doesn't layer on additional costs," said Mike Cook, corporate vice president and assistant treasurer at Wal-Mart.
Source: Wall Street Journal