Jason Del Rey

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Kohl’s Joins MCX, the Mobile Wallet and Payments Effort Backed by Big Retailers

Kohl’s, the multibillion-dollar department store chain, is the latest big-box retailer to join a mobile payments cooperative called Merchant Customer Exchange, or MCX. The Wisconsin-based retailer joins a list of retailers that already includes Walmart, Target, Best Buy, Shell, Gap and CVS.

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The group formed a new company in August to create their own mobile wallet technology and mobile payment app in an effort to wall off customer transaction data in an increasingly mobile world, drive down credit card costs and appeal to those shoppers who increasingly want their phone to help them shop.

There’s a lot we still don’t know about MCX. For one, the company won’t comment on the timing of its market entry, though a formal product launch seems a ways off, since it is still in the process of finding a CEO.

In the meantime, we do know a couple of things. There are three main reasons for the initiative on the part of retailers. One: These retailers want to keep customer purchase data to themselves, and away from other mobile wallet operators, such as the Googles and Squares of the payments world. Two: They want to appeal to shoppers who look to their phones to add value to their shopping experiences. Three: They want to try to lower the costs they currently pay to financial institutions for non-cash transactions.

As a result, it seems likely that the MCX app — which will have a more consumer-friendly brand name before going to market — will launch with ACH transactions that debit a shopper’s bank account as the payment method rather than allowing shoppers to upload credit card account info, since credit card “interchange” fees are an ongoing source of contention for retailers.

An MCX executive, Dodd Roberts, wouldn’t talk about these details, but said simply that, “We hope that MCX provides opportunities for efficiencies to drive down costs.”

For you the shopper, the promise — as far as I can tell — is a way to store, in one spot, offers, promotions (perhaps location-based) and loyalty card information from a bunch of the places you shop on a regular basis. Will you be able to leave your wallet at home on a regular basis and just use MCX? In some parts of the country, perhaps. In others, not so much.

It will be interesting to see whether MCX creates an umbrella loyalty program where points can be earned and used at all of the participating retailers. MCX promises there will be other benefits that will “improve the shopping lives of users,” but won’t say what those are.

One thing is for sure: Simply offering shoppers the opportunity to pay with their phone instead of with cash or a card isn’t enough of an incentive to force mainstream adoption.

On the technology side, MCX says the mobile payments will occur in-store via barcode scanning. More specifically, the barcodes will likely take the form of QR codes, though MCX is not yet confirming that.

Either the shopper will snap a photo of a barcode to complete a purchase, or a cashier will scan a barcode that the app generates, Roberts said. Other technologies, such as near field communication, may be integrated in the future if they make sense, but the group chose barcodes to start, because “any consumer with any smartphone today can read a barcode or display a barcode,” Roberts said.

The company previously announced that European company Gemalto would build the mobile wallet. And today MCX is announcing that FIS will handle the payment processing and settlement for transactions completed via the MCX mobile wallet.

Some participating retailers may choose to integrate the mobile wallet technology into their own apps to help make the payment process easier, since MCX will already have payment info stored in the cloud. But, while mobile is the focus, Roberts said that the payment technology may also be used to power payments on participating retailers’ websites.

If the effort does get traction, the company will likely pitch smaller businesses on participating. But until we see a product, that’s still a big “if.”

“I would not confuse a lack of public announcements with a lack of progress,” Roberts said. “We’re in the process of working on the solution right now.”


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