U.S. Merchant Group MCX Chooses Gemalto as Wallet Supplier
France-based Gemalto today announced it has been hired by U.S. merchant group MCX to build the group's mobile wallet, which will support payment and other mobile-commerce applications.
It’s one of the first announcements of a contract award by MCX, or the Merchant Customer Exchange, which was founded last year by such major U.S. retailers as Wal-Mart, Target, Best Buy and 7-Eleven. All told, more than 30 merchants have joined the group, including department store, supermarket, convenience store and gasoline retail chains.
The Gemalto announcement does not say when the group will launch its much-anticipated mobile wallet, and MCX has yet to disclose a target date.
“I don’t know what the final rollout plans for MCX and the members, but what Gemalto is offering here is basically a wallet software and development kit so MCX and their retailer members will be able to embed this wallet functionality with their own applications,” Winston Yeo, vice president for mobile financial services at Gemalto, told NFC Times. “Basically, we provide this option to actually adapt to each merchant’s strategy and business requirements.”
He declined to be more specific. But MCX leaders, including a representative from Wal-Mart, speaking at a conference last fall, indicated that each merchant member could introduce MCX-enabled payments and other wallet services in their apps or could use an MCX wallet app by itself.
MCX in January disclosed that its wallet will initially support bar-code and cloud-based technologies, “which will allow it to work on the broadest array of smartphones and at a wide range of merchant locations, where bar-code payments can be accepted without major new capital expenses,” said a statement from the group.
An MCX spokesman today confirmed to NFC Times that plans call for the MCX application to be “able to integrate into individual merchants’ mobile applications.
“MCX will also offer a freestanding application that can be used at all accepting locations and, of course, make MCX useful for smaller merchants who don’t have their own mobile application,” he said.
When asked if Gemalto’s selection by MCX to build the wallet indicates the merchant group wants to be ready to introduce NFC services in the future, Gemalto's Yeo referred the question to MCX. Gemalto is a major supplier of NFC technology, including trusted service management, and its mobile wallet platform is designed to work with its TSM.
The MCX spokesman noted that Gemalto's wallet software and platform could support other technologies, including bar-code-based payments.
“The initial MCX solution will primarily leverage bar codes because they are compatible with nearly all smartphones and work with POS equipment that is already in many merchant locations,” he said. “If, over time, a different technology emerges that makes more sense, MCX intends to adapt.”
He didn't seem to make a distinction between QR codes, which most merchants don't support at the point of sale, and other types of bar codes.
A source told NFC Times earlier that that NFC has been on the roadmap for MCX, but it could be one to two years before the group adds the technology.
Yeo also declined to say when it got the contract from MCX or how long Gemalto has been working on the wallet.
UPDATE: In its announcement, Gemalto also said it provide a mobile-payment platform to MCX. This could be used to help secure cloud-based payments, though Gemalto did not elaborate. It's also unclear how much Gemalto's TSM technology would be involved in the project, even without NFC applications. END UPDATE.
When launched, the MCX mobile wallet would compete directly with those from the Isis joint venture, Google and possibly others involving Visa and MasterCard Worldwide. But in addition to declining to discuss its launch plans, MCX also has yet to name a chief executive officer, though the search is ongoing, an MCX spokesman told NFC Times.
Focused on Transaction Fees
It also remains to be seen what type of payment services the MCX merchants launch.
Most insiders agree that the main goal of the MCX initiative is to reduce payment transaction fees for member merchants.
Among the likely scenarios is for the merchants to issue private-label payment cards for the wallet, which don’t require as much security as open-loop credit and debit cards. Closed-loop payment could use bar codes, which are less secure than open-loop applications certified by Visa Inc., MasterCard Worldwide and other major payment schemes. The closed-loop Starbucks mobile payments service uses QR codes, for example.
MCX, however, has said it would be willing to partner with banks or other financial institutions.
But observers agree that one of the goals of the MCX initiative would be to help its member merchants exert pressure on Visa and MasterCard and big issuers to lower transaction fees.
A secondary goal of the MCX wallet is to keep a tighter control of consumer data. Some of the MCX merchants, such as Best Buy, have expressed fears in the past about such mobile-commerce players as Google collecting its customers' data through its Google Wallet.
Gemalto in its announcement today noted that the wallet it is building for MCX would give consumers “access to a personalized payment experience integrated with merchant offers, promotions, loyalty and location-based services, which they will be able to use at many of the large retailers at which they regularly shop.”
The contract win with the high-profile merchant group is a boost for Gemalto’s mobile wallet offer. Like other smart card, TSM and security vendors, such as Germany-based Giesecke & Devrient, Gemalto is branching out into mobile wallet software and platforms. The Gemalto offer includes user-interface software backed by a mobile-wallet server and a link to its TSM.
Other mobile-wallet suppliers, such as C-SAM, CorFire and Sequent Software, all based in the U.S., were also likely considered for the MCX wallet deal. C-SAM had earlier built a wallet for an internal test by MCX, NFC Times has learned.
C-SAM provides the wallet for the Isis joint venture, though Isis is having another company, U.S.-based Mutual Mobile, develop the second version of the wallet app, while Isis will continue to provide the wallet server, as NFC Times has reported. Gemalto serves as TSM for the NFC-enabled Isis wallet, now being tested in two cities.
C-SAM supplies wallets elsewhere, most not supporting NFC, except for the SmartWallet in Singapore launched last August by operator StarHub.
CorFire, the mobile-commerce unit of South Korea-based SK C&C, is providing mobile wallets to two German mobile operators, including Vodafone Germany, NFC Times has learned. It also has announced it is supplying a wallet to SingTel in Singapore for the telco's recently launched NFC-enabled service and to China Unicom for China's No. 2 operator.
CorFire last October announced a deal to supply wallet software to Vodafone operators globally. It has also supplied TSM services for the Google Wallet with U.S.-based First Data.
Sequent, which bought the wallet software assets of U.S.-based Vivotech, recently announced it was supplying a wallet platform for Canadian bank CIBC.