Is MCX’s Loss Apple’s Gain?

There are two things that can be taken as certainly true coming out of the final days of April 2015.

1. It is a very good time to be Apple.

2. It is not such a good time to be the Merchant Customer Exchange (MCX).

Apple’s good week was so good -– it’s almost hard to know where to start.

The iPhone 6 and iPhone 6 Plus have been homeruns and a half to such an extent that Apple has just reported its best second quarter earnings in the company’s history. iPhone sales brought with them a 33 percent increase in its quarterly profit from Q2 2014.

“We are thrilled by the continued strength of iPhone, Mac and the App Store, which drove our best March quarter results ever,” Apple CEO Tim Cook said in the company’s earnings statement.

There were some tougher spots of news – iPad sales are down (though Cook is hopeful that iPad’s jump into enterprise usage will buttress those sales) – and some lingering questions about what the specific sales and use figures are for things like Apple Pay and the Apple Watch.

But with a posted a quarterly revenue of $58 billion, net profit of $13.6 billion and $194 billion in cash or cash equivalents (clearly we set the bar too low two weeks ago when we wrote about how Apple should spend its cash) it’s been an undeniably awesome week to be Apple.

It has also been an awesome week for MCX – though only if one goes with the historical definition of awesome – since the high speed coming-apart-at-the-seams scale and scope that MCX has been experiencing since Monday – has certainly inspired awe among all industry watchers who’ve been observing it unfold in real time.

The “shock and awe” began on Monday when Best Buy announced that it will start accepting Apple’s mobile wallet this summer. The rollout has begun in Best Buy’s mobile app, which now takes Apple Pay – but that acceptance will carry over into physical stores later this year, once the chain has had time to update its checkout systems for NFC compatibility.

The other reason for the delay, of course, is that Best Buy, as a founding member of MCX, is currently operating under a signed agreement that prevents them from taking competitor mobile wallets  – an agreement that expires for Best Buy (and all of the other early signatories) this summer.

And, if losing a founding merchant to the competition wasn’t bad enough – to add insult to injury, Best Buy is no longer even willing to offer a hard commitment to accepting CurrentC later this year when MCX actually launches it.

“We remain invested in MCX,” a Best Buy spokesperson told Re/Code. “We are actively monitoring their pilots…It’s too early to declare whether we will take it at launch.”

That was Monday.

On Tuesday – for reasons that MCX spokesperson Kristin Parran Faulder categorically denied were in any way related to Best Buy bailing – it was announced that MCX CEO Dekkers Davidson was stepping down to pursue “other opportunities.”

“We appreciate the contributions Dekkers has made to MCX in helping establish the foundation for the company’s growth and success,” MCX noted in statement. “We wish him well in his new endeavors.”

Unsurprisingly, the headlines this week have been globally unkind.

And we literally mean globally.

PYMNTS favorite headline this week- generated by Google “Apple Pay + MCX” – actually came from a French publication – though the sentiments expressed were clear enough that you don’t need to actually speak French to catch the gist.

MCX première victime d’Apple Pay”

And while the narrative of this week seems to call for the writing of a philippic for Apple Pay (and an obituary of MCX), it bears remembering that this is not the first time that the headlines have looked like this.

In fact six short months, ago MCX managed to get itself mildly hacked during the week that that Apple Pay first became available for use in store, and was embroiled in a massive kerfuffle over the accidental Apple Pay acceptance that some MCX merchants experienced because they also enabled NFC payments. The shutting off of NFC capabilities and subsequent consumer Twitter rampage set off a headline balance that looks eerily similar to this week’s.  In fact, insofar as MCX managed to make it through this entire week without being compared even once to the Three Stooges by USAToday one could even argue that the last week of April is actually going very slightly better than the last week of October did for the company.

OK, that might be a bit of an overstatement – but it does seem at least worth asking if things are quite as bad as they seem for MCX – or quite as good as they seem for Apple.

Or Apple Pay anyway.


“Once upon a time, there were four payments networks that ruled the land called Payments in the United States,” MPD CEO Karen Webster in what was almost surely history’s first and only fairy tale written on the subject of payments now nearly three years ago. “They created rules and regulations that every merchant in the land had to abide by – and even imposed fees that those merchants had to pay if they wanted to accept cards bearing the network’s logo.”

MCX’s story springs from how much merchants really, really hate paying those fees.

“MCX was an entity that started three or four years ago, long before we were involved, and it began as a holy war against the card networks,” noted Chris Gardner, CEO of Paydiant. Paydiant’s technology is what underlies the MCX app – it is also PayPal’s newest acquisition.

Gardner did note that this vision has evolved some from that early vision.

“The messaging has shifted over time to be one more about platform capabilities, marketing services and things that drive consumer engagement. That’s not to say that there’s not an ‘anti-processing fee’ bullet point in their mission, but it’s really shifted from that,” Gardner said.

The problem – it seems so far – is that what exactly MCX has shifted into is not exactly clear. During the press conference last year, now ex-CEO Davidson noted that at some point in the future, the CurrentC mobile wallet might include cards – which immediately caused an entire ecosystem to scratch their head and ask “wait, then what is the point of all of this?”

Leading the company, for the time being at least, as it transitions into a more expansive vision for their mobile platform will be interim CEO Brian V. Mooney.

And Mooney certainly knows what he is doing vis a vis payments. He is a seasoned and well respected payments executive. Prior to this gig, he was the CEO of Bank of America Merchant Services (a partnership between First Data and BofA) – one of the largest merchant payment acquirers in the U.S.

“Brian is a proven leader who has spent a substantial portion of his career at the forefront of payment technology, processing and acquisition. He is the right leader for MCX now: talented, experienced, consumer-focused, and fully prepared to help MCX and its hard-working employees deliver on the company’s enormous potential and vision.”

Roger that. And we truly mean that.

The new leadership will probably not be a negative for MCX – and so far Best Buy has not triggered a massive defection of merchants jumping ship to Apple Pay – yet.  Losing an anchor merchant to a competitor is bad, of course, especially one as prominent as Best Buy but as a one-off, it’s not a business killer.

That said, if CurrentC doesn’t manage to get into the hands of consumers soon – it seems that this product is running an increasingly high risk of dying before making it out of beta or alpha, whichever it is in at the moment.


While the last days of April were undeniably good for Apple as a whole – it is not as easy to make that claim about Apple Pay.

As Inc. noted earlier this week –  MCX is basically Apple’s most minor problem.  Whether MCX holds on or goes bust likely does not move the ball very much for Apple – especially as MCX seems positioned to relax its exclusivity requirements as those initial contracts come up for renewal. Merchants will ultimately decide what to accept and that will be based on what their consumers like to use to pay.

But Apple Pay’s main issue is sluggish adoption among consumer and users.

Only a small segment of overall consumers can use Apple Pay (iPhone 6/6 Plus users), and among those who can, 85 percent have not, according to PYMNTS/InfoScout survey conducted in March of this year. That, in part because they forget to use it when they are in a store that accepts Apple Pay and in part because there aren’t a ton of merchants that accept it right now – which sort of contributes to the forgetfulness factor.

In the digital world, Apple Pay also only works (with those iPhone 6’s) in mobile apps (not browsers) and not online. Perhaps causing Apple just a little heartburn – especially when one takes a look at the headline that got lost a little bit in the firestorm related to MCX.

PayPal is rolling out one-click shopping across the web – including both desktop and mobile – something that is interesting when considering that 85 percent of purchases made on mobile devices are made via the mobile Web versus native mobile apps.

PayPal is an app-based mobile wallet so works on any device – iOS or Android – and to tap into one-click merchant partners of PayPal have to do exactly zippo in the vast majority of cases.

On the surface this may not appear to matter – since Apple Pay is mostly discussed in the context of in-store shopping and PayPal is still almost viewed exclusively as an eCommerce payment method.

But that is a view PayPal is looking to change – it’s just that they think the future of physical retail and mobile might not actually be premised at waving a phone at a traditional POS of some kind.

“You’re starting to see this upgrade of buying experiences,”PayPal SVP Bill Ready told Webster in an interview he did with her right before the launch. “We believe that merchants have a big role to play in driving the kind of experiences that will create real engagement in their stores and we’re going to provide great infrastructure for that. One Touch knocks down one huge barrier for that. As much as it has been very difficult for the whole industry to address mobile in-store, we think that there is a huge step forward here in terms of us really being a key enabler for the merchant. We think great merchants apps are going to drive a lot of great experiences at the store beyond just tapping at the register.”

Now, Apple is the most profitable company on Planet Earth, and brings new meaning to the phrase “richer than Croesus” and changes the face of technology as often as normal people change their toothbrush. So, it would be impossible to say, on balance, that Apple is having the same kind of “awesome” week that MCX is having.

But Apple Pay is just a small part of that pretty picture – and as of right now it is a hazy part. And while MCX’s future looks anything but assured – its future will clearly have more of a bearing on the future of MCX than vice versa. At the end of the day, merchants just want to accommodate the payments choices that their consumers want to use. And if that includes Apple Pay, no MCX merchant will want to get in their way of doing that – especially when it remains to be seen what the “it” really is.


New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.

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