CurrentC Took the Wrong Lessons from Uber

Back in 2014, Dekkers Davidson, then CEO of the Merchant Customer Exchange, declared that the mobile wallet venture would draw inspiration from Uber and be just as disruptive to financial services as the popular ride-sharing app was to the taxi industry.

But Uber's success stems largely from its decision to make payments invisible, whereas MCX was developing its CurrentC wallet to do just the opposite.

CurrentC as an app may be gone following the abrupt end of the system's yearlong pilot, but the MCX venture still has a chance to fulfill its mission. Its short-term focus will be to work with partners such as JPMorgan Chase, where it can truly replicate the Uber experience by letting MCX operate in the background of a more full-featured offering.

Walmart Pay, a product one of MCX's biggest and most outspoken backers, is one example of a system that simply adds payments to an existing and more full-featured consumer experience. The Starbucks app is another example, building on the success of the coffee chain's already popular gift card and loyalty programs.

"Starbucks succeeded—and now Walmart Pay is trying to go the same direction—by enhancing their own app with payments functionality, rather than trying to deliver a broad wallet," said Zilvinas Bareisis, a senior analyst with Celent.

The MCX concept was hatched in 2012, and hindsight oversimplifies some of the lessons learned since the idea was born.

At the time, MCX seemed like a good idea to most of the nation's largest retailers, who were critical of bank and tech-industry efforts that threatened to remove lower-cost payment options while also removing the retailers' ability to gather valuable shopping data.

Retailers are often the deciding vote in whether a new payments technology succeeds; if merchants do not devote resources to marketing and training, a new mobile payment method will remain unused and ignored until something comes along to replace it.

For MCX merchants, that something was Apple Pay.

Apple's mobile wallet arrived on the scene with the full cachet of the beloved Cupertino-based company's brand, and with a pricing model that drew revenue from banks, not merchants. Eventually, MCX's most outspoken supporters, including Best Buy and Rite Aid, signed on with Apple. In early 2015, just months after Apple Pay launched, MCX CEO Davidson stepped down.

Even as Apple changed the market, MCX remained committed to developing its CurrentC app. The venture's ambitious plan was to create a platform with a robust engine for accepting a diverse range of payments, from credit and debit to proprietary cards, with options to also accept lower-cost ACH payments while supporting merchants' existing loyalty programs.

Merchants could customize the app to suit their own purposes, even going so far as to add CurrentC to their own branded apps. In a pilot that began in Columbus, Ohio last year, CurrentC was said to be successful, with major merchants including Target Corp., Walmart, Sears and Wendy's accepting the mobile wallet.

But the CurrentC app had trouble living up to its promise.

MCX seems to have stalled at helping merchants figure out the lower cost payment option, first of all, said Cherian Abraham, the digital payments and commerce executive at Experian. For retailers trying to break through via mobile wallets, the focus should have been around fixing core customer problems such as discovery, curation and identity, he said.

"The mobile wallet should support discovery, because consumers start elsewhere on the purchase journey and any time that happens for a retailer, there's a shift in control and margins," Abraham said. "Curation, because consumers do not need a searchable index of a hundred million merchandise items; they need the merchant to help answer the question of 'What do I want to buy?' And identity, because today identity is fragmented across the purchase experience and at every waypoint that it's broken it introduces friction."

This seems to be the path Walmart is taking with its own Walmart Pay system, which is designed to complement established mobile features such as Walmart's Savings Catcher, a price-matching tool.

Finally, CurrentC likely fell on its own sword because of the difficulties of achieving industry cooperation in a highly competitive field like retail.

"Consortia are devilishly hard to pull off—given the inherent competitiveness—especially among retailers," said Steve Mott, a principal with payments consultancy BetterBuyDesign, and a close observer of MCX's efforts. "MCX lasted much longer than most, and did achieve some swipe-fee reductions," he said, pointing to its partnership with Chase Pay, which is built on the closed-loop ChaseNet system that offers lower fees to Chase merchants.

Weve was another consortium of rivals—three large U.K. mobile telco companies—that formed in 2012 to develop a broad mobile wallet. The concept fizzled in the fall of 2015 when the partners failed to agree on a strategy.

"At least for the largest MCX members, who were looking for lower-cost payment options, the consortium was a success, albeit not a direct result of going mobile together," Mott said. And it's worth noting that so far no one has "cracked the code" for a broadly successful mobile wallet, he added.  "As MCX said, mobile is in the 'long game' mode," Mott concluded.