Walmart, Target to offer mobile payment app

As the mobile-payment industry continues to grow, retailers As the mobile-payment industry continues to grow, retailers Walmart, Target and Best Buy are creating their own platform. (May 30, 2012) Photo Credit: AP

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Retailers including Walmart, Target and Best Buy formed a company that would allow customers to pay for purchases with their mobile phones as the companies work to gain control over the growing method of processing purchases.

The company, named Merchant Customer Exchange, or MCX, is developing a mobile application, the retailers said Wednesday. The app is intended to work with all smartphones and as many forms of payment as possible, including Visa and MasterCard debit and credit cards, said Terry Scully, president of Target's financial and retail services.

The chains see a chance to grab part of the emerging mobile-payments industry, which may reach $170 billion in 2016 from $60 billion this year, according to Juniper Research. The venture also will try to improve the in-store experience and cut costs, including swipe fees the chains pay when consumers use credit cards, Scully said.

"This technology should help in addressing what is a well-known issue," Scully said.

The venture comes amid a proposed $6.6-billion settlement between merchants and Visa and MasterCard of a lawsuit concerning credit card swipe fees. The settlement faces opposition from retail trade groups and individual retailers, including Walmart and Target.

Credit-card swipe fees, which average about 2 percent of each transaction, generate about $40 billion a year for banks such as JPMorgan Chase & Co., Bank of America and Citigroup.

MCX is in talks with several large financial institutions to become partners, Scully said.

Including large banks may be a key to the venture, said Richard Crone, chief executive of Crone Consulting, which advises retailers and banks on mobile-payment solutions.

Partnering with banks could lead to transactions being processed directly by a financial institution instead of passing through the payment networks run by Visa, MasterCard and others, he said.

Customer data also is an important part of the push to create MCX, Crone said. Mobile-payment products from Google and ISIS, which is backed by carriers Verizon Wireless and AT&T Inc., track customer behavior and then send targeted ads.

The platform will be available to all kinds of merchants, including stores, casual restaurants and gas stations, the retailers said.

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