First Wal-Mart. Now Target? What Retailer Wallets Mean for MCX’s CurrentC App

With Target Corp. reportedly planning its own mobile wallet, the nation’s fourth-largest retailer may some time next year join the largest, Wal-Mart Stores Inc., in launching a proprietary wallet app. That could not only add to the fragmentation of the nascent digital-wallet market, it could also indicate weakening attachment to CurrentC, the cross-merchant wallet developed by a 40-brand consortium of which Target and Wal-Mart are both prominent members, observers tell Digital Transactions News.

“This doesn’t bode well for MCX,” says Nick Holland, an independent payments analyst, referring to Merchant Customer Exchange LLC, the joint venture behind CurrentC. Launched in 2012, MCX started testing CurrentC in Columbus, Ohio, in September and has hinted it may expand the pilot next year, though it remains unclear when a nationwide rollout might begin.

Wal-Mart, a founding member and driving force behind MCX, announced its own wallet entry, Walmart Pay, earlier this month. Set for launch next year, the product will store customers’ payment cards and link to the point of sale via quick-response (QR) codes, the same method MCX uses, though Wal-Mart says it will use a proprietary development of the technology.

Quoting unnamed sources “familiar with the matter,” Reuters on Friday reported Target is in the early stages of developing its own wallet. Few details of the project are known, but the product is expected also to work with QR codes and store customers’ payment cards. No definite launch date is known. Both wallets are expected to operate within the respective retailers’ existing mobile apps.

Meanwhile, both Wal-Mart and Target are accepting CurrentC in their Columbus stores.

The impact these proprietary moves could have on MCX, along with the strategy behind the new wallet apps, are matters of considerable debate. Most observers, however, argue impatience with the relatively slow development of CurrentC likely has much to do with the recent moves.

“We are heading into the fourth year of the not-yet-rolled out CurrentC wallet,” notes Mary Monahan, research director for mobile at Javelin Strategy & Research, Pleasanton, Calif., in an email message. “Mobile-wallet use among mobile-device owners almost doubled between 2013 [and] 2015. If these merchants don’t get in the game soon, they will get left behind holding an empty pocketbook.”

Steve Mott, principal at BetterBuyDesign, a Stamford, Conn.-based payments consultancy that advised MCX in its early days, argues marketing considerations are now trumping all other factors. “The biggest merchants have to prioritize their own brands and business models, and will therefore go their own ways,” he says via email.

For their part, Target and Wal-Mart insist they remain committed to MCX and CurrentC. In a response to an inquiry from Digital Transactions News, a Target spokesman says by email that the company has no comment on the Reuters report. “We’re excited to be part of the CurrentC pilot,” he says. “We continue to explore additional mobile-wallet solutions, such as Apple Pay, and will ultimately work to provide the best and most sought-after mobile wallet experiences for our guests.” Target currently accepts Apple Pay in its mobile app but not in its stores.

Publicly, MCX professes to be unruffled by the latest news. “Target continues to be a strong, supportive partner of MCX and CurrentC as we build a mobile payment app that offers consumers choices and convenience at checkout,” says a spokesman in a statement emailed to Digital Transactions News.

Observers say more major merchants, whether part of MCX or not, are now likely to introduce their own wallets, with loyalty and other functions layered on. “Because these large merchants can now innovate at the physical point of sale, too, we\'re seeing the first round of experimentation around the merchant-branded ‘Pay’ approach,” says George Peabody, a senior analyst at Glenbrook Partners, Menlo Park, Calif., in an email message. “I expect the focus of these merchant-based payment schemes to stay on the consumer\'s commerce experience.”

There is nothing stopping Target and Wal-Mart from incorporating CurrentC in their proprietary wallets. Indeed, some argue the consortium approach, with its ability to manage payments and payments data across a wide variety of major merchants using the same wallet app, remains the better one. “The network effect is far more valuable” for consumers and merchants, Holland says.

And Mott argues there could be room for MCX to appeal now to smaller merchants. “The question is, where do the rest of the 11 million merchants in the U.S. go to play?” he asks. “One approach MCX could take is to reposition itself to support the rest of the merchants.”