Large retailers collaborate to develop m-wallet

Taking on Google's m-wallet

A number of US merchants including Wal-Mart, 7Eleven, Target and Sunoco are reportedly developing a mobile payments service in an attempt to capture a segment of the growing market, reports StrategyEye. A Wall Street Journal report claims that the collaboration by the merchants dubbed Merchant Customer Exchange (MCX), is at an early stage, with no set launch date or a CEO. MCX will be created as an NFC-based service, with consumers downloading the accompanying software and paying for goods by tapping their smartphone against an accompanying reader in-store.

A partnership between traditional retailers indicates the uptake of players from different industries that are attempting to carve their place in the payments value chain. With companies across finance, commerce, telecoms and technology developing their own payments services, competition is fierce while consumers attempt to get to grips with their many options. Consumers, in addition, are on the whole uneducated regarding technologies such as NFC, which has led to slower adoption, despite analyst prediction for the future value of the market. There appears to be some realisation of this, however, with the formation of the Mobile Payment Committee earlier this month, consisting of Google, PayPal and US mobile operators. The committee has been created to help boost adoption by helping to produce standards for merchants and service operators amid the range of services on offer.

Juniper Research forecasts that global mobile payments transaction volume will hit USD1.7 trillion annually by 2017. Research conducted by the firm suggests that both remote purchases and in-store NFC-based transactions will drive this total, accounting for more than half of the figure. However, it also cautions that consumer awareness of NFC has to increase considerably for it to fulfil its potential.

While we are now seeing significant deployments of contactless infrastructure, consumer awareness is extremely low. Thus, it is imperative for all members of the NFC value chain to engage with the public to heighten its profile as a simple, intuitive payment mechanism,” says Juniper analyst Dr Windsor Holden.

NFC is tipped by many analysts to become the dominant standard in mobile payments. Research by Juniper in May predicts that more than one in four consumers in the US and Western Europe will pay for goods in-store using an NFC-enabled mobile device by 2017, while separate research from Berg Insight indicated that sales of NFC-enabled smartphones will hit 100 million this year, increasing adoption of the technology. However, this has not stopped other m-payments formats gaining traction as various firms release their offerings. Square is making early headway in the US, underlined by its recent partnership with Starbucks, a move likely to boost its early advantage further.

Other services emerging include Google’s NFC-based Google Wallet platform, which recently underwent a revamp to enable consumers to link any card to the service, in order to kick-start adoption after it initially struggled. Mobile operators AT&T, T-Mobile and Verizon, are also partnering to offer a product to consumers. Dubbed Isis, the NFC-based m-wallet has made a series of collaborations with merchants and smartphone manufacturers. Isis also has the backing of some financial institutions, with AmEx, BarclayCard, Capital One and Chase all supporting the project.

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