During the National Retail Federation’s Annual Convention and Expo earlier this month, the Merchant Customer Exchange, or MCX, confirmed that it plans to identify shoppers by scanning quick-response (QR) codes created by mobile apps on their phones. It also now reportedly plans to withdraw shoppers’ payments using the automated clearinghouse system.
From Storefront Backtalk:
By using ACH transactions to debit bank accounts or credit lines instead of going through payment card brands’ networks, MCX expects to reduce transaction cost to as little as four cents—and cut Visa and card-issuing banks out of the loop.
Both the use of QR codes and the ACH system are consistent with MCX’s goal to reduce payment-acceptance costs. Near Field Communication, a competing technology for mobile payments, requires hardware upgrades, and it could be another two years before sufficient numbers of NFC-enabled phones are available to justify such an investment on a large scale. So using QR codes for payments seems a logical step for now and is less costly than NFC. However, NFC provides easier two-way communication between consumers’ phones and merchants’ terminals, and that will help drive merchants to embrace NFC in the long run.
But MCX also cannot ignore the benefits of tying in with an existing network that links all the various players in the payment chain to achieve its own scale, which would be consistent with another organizational goal—to alleviate the need for consumers to have multiple mobile wallets on their phones to shop at different merchants’ locations. Discover Financial Services, which already has opened its network to such organizations as eBay’s PayPal and Bill Me Later, as well as to the telecom-owned Isis network, could take on that role, if asked. Discover’s mantra of ensuring security, setting standards and rules, and creating a value proposition for consumers and merchants seems consistent with MCX’s ambitions. The other major card brands have been less open to letting third parties ride their network rails, especially without brand exposure.
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