The future of payment apps such as Apple Pay just got a lot cloudier. The Merchant Customer Exchange (MCX) announced that it will shut down all the accounts of its Current C payment solution on June 28, 2016.
Current C was being beta tested at a variety of stores around Columbus, Ohio. That test will apparently end on June 28, with the shutdown of the accounts; a message on the Current C website indicates.
It is not clear if this is the end of Current C or the MCX, but it is a major setback for all payment apps. Ars Technica speculated that the reason Current C failed was a lack of public trust and acceptance. If that is true it bodes ill for Apple Pay, Alphabet’s (NASDAQ: GOOG) Android Pay and Samsung Pay, because retailers have other plans for the technology.
Walmart Developing Own Payment Ecosystem
The MCX is a consortium of retail giants including Walmart Stores Inc. (NYSE: WMT), BestBuy (NYSE: BBY), CVS Pharmacies (NYSE: CVS), Target (NYSE: TGT) and others. It looks as if those retailers were not that serious about promoting Current C.
To make matters worse, one consortium member; Walmart, has developed its own payment solution: Walmart Pay. Walmart Pay is currently being tested in Kansas, Arkansas and Missouri; with a full roll out expected in mid-June, Fortune reported.
Walmart; which is in the middle of a well-publicized battle with Visa (V) over credit-card interchange fees, is trying to develop its own payment ecosystem. Interchange fees are the money retailers pay every time a customer uses a card to pay. Walmart has sued Visa several times over cards several times; the latest suit over chip cards and PIN numbers was filed on May 11.
MarketWatch reported that Walmart plans to stop accepting Visa cards at its 405 Canadian stores. The first stores to drop Visa, will be those in Thunder Bay, Ontario on July 18. The Canada battle is definitely being fought over interchange fees.
“Unfortunately, Visa and Walmart have been unable to agree on an appropriate fee for Visa transactions,” a Walmart spokeswoman told The Wall Street Journal.
Walmart Learns from Alibaba?
It looks as if Walmart; which has its own money transfer system is about to go further. A strong possibility is that the world’s largest retailer is planning to implement a blockchain based solution possibly using the Thunder Network as a basis.
A major reason why Walmart is developing its own payment ecosystem is the huge payoff Alibaba (NYSE: BABA) got from a similar operation. Alibaba spin off Ant Financial; which operates Alipay, is one of the world’s most valuable Unicorns with an estimated worth of $60 billion. It recently raised $4.5 billion in venture capital.
Credit Suisse estimated that Alipay controls 58% of China’s online payment market, The Wall Street Journal reported. Were Walmart Pay to become as popular in the USA and Canada as Alipay is in China; the payoff would be great. Walmart would save vast amounts on transaction fees if such a system were to catch on. If Walmart could convince just 5% of its USA customers to use Walmart Pay, it would have a huge system, because the retailer reported $483.12 billion in revenue on April 30, 2016.
The appearance of Walmart Pay at the same time as the brawl with Visa does not seem like a coincidence. It looks as if Walmart plans to slowly abandon card-based payment and move to next generation technology.
Is this the End of the Line for MCX?
The purpose of MCX was to use payment apps to reduce or eliminate credit-card interchange fees. The consortium was troubled from the beginning with some major retailers; including Kroger (NYSE: KR), Amazon (NASDAQ: AMZN) Dollar General (NYSE: DG) and Costco Wholesale (NASDAQ: COST), conspicuously absent.
Other problems it faced included; a well-publicized hack of user information in 2014, and heckling from the tech press. To make matters worse, customers were as skeptical as the retailers and refused to sign on.
A strong possibility is that MCX will shut down completely and disappear. Another is that it will simply be folded into JPMorgan Chase’s (NYSE: JPM) Chase Pay solution. Customers can already use Chase Pay on websites like 1-800-Flowers.com, eBags.com and the Gerber Life Insurance Co. They can also buy coffee at Starbucks through Chase Pay.
Here Comes Chase Pay
Bloomberg reported that Chase Pay users will soon be able to pay for fuel at Shell filling stations with the app. Users will first have to use Shell’s App; but at some point Shell’s gas pumps will accept Chase Pay itself. The Chase Pay website is already up and running; so the App is available, but no brick and mortar stores are listed there. Instead the app can currently only be used at websites.
Chase Pay is only supported by Chase’s credit and debit cards and few select Visa cards, but it seems to have a few advantages over Apple Pay. Interestingly enough you can access united Airlines, Southwest Airlines, Ritz-Carlton and Marriott Visa Cards through Chase Pay. That means it might soon be possible to use Chase Pay to buy airline tickets or hotel rooms from them. Apple Pay and Android Pay cannot be used at most airlines and hotels.
The Amazon.com Rewards Visa and Zappos.com Visas are also supported on Chase Pay. That indicates it might be possible to use Chase Pay at those popular websites in the near future, and integrate it with Amazon Pay. Apple Pay and Android Pay cannot be used at Amazon or its subsidiaries right now.
It looks as if Current C is probably dead, but at least two major new payment apps are rising from its ashes. Both Walmart Pay and Chase Pay have the potential to be far larger than Apple Pay, which is bad news for Apple Inc. (NASDAQ: AAPL). Those brands and not Apple Pay could be the future of payment.