MCX has picked a processor and picked up Kohl's (NYSE:KSS) and Circle K as merchants who have joined the initiative. The Walmart-backed alternative to Visa (NYSE:V) and MasterCard (NYSE:MA) for in-store payments will use FIS to process payments.
Adding FIS to the MCX payments chain fills in another piece of the payments puzzle for MCX, which still hasn't officially announced most of the details of how its system will work. According to a combination of official and unofficial MCX sources, a transaction will involve a customer using a mobile phone to display a QR code to a cashier, then the amount and account data will be passed through the store's point-of-sale system to FIS, which will route it to the customer's bank as an ACH transaction. That avoids Visa- and MasterCard-set interchange fees on each transaction.
With department store Kohl's and convenience chain Circle K, 20 of the 100 top U.S. retailers have signed on to the initiative, MCX said in a statement.
But neither chain has committed to actually using the MCX system at point-of-sale. Nor have most of the other chains who have signed on, some of whom paid hefty fees to join the group. None of the retailers have publicly said why, but most probably believe it's worth keeping a close watch on anything that Walmart is solidly committed to. If MCX works as hoped, it could also give the member chains leverage in negotiating with Visa and MasterCard.
There's also no rush for retailers to make a solid commitment to use the system, since no launch date has been set. Many of the non-technical deals of the system have also not been announced, including whether a single MCX mobile app will be used for all participating chains or whether the retailers will make the MCX payment system part of their own mobile apps.
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