A week after Apple introduced Apple Pay that allows consumers to pay stores within their apps, a group of retailers led by Wal-Mart aims to take control of the market.
The retailer-backed system dubbed as CurrentC is expected to go live in 2015. However, analysts doubt that the new system can beat Apple Pay. The retailers joined together to shift the payment system, or at least push credit card companies to reduce their interchange fees. Interchange fees are the fees paid by the retailers to credit card companies for each purchase; which costs around 2-3 percent of the value of each transaction.
"CurrentC is built for retailers, to help them cut out interchange fees," Nick Aceto, senior director at payment technology firm CardConnect, said to Reuters. "It's not a solution that will appeal to customers because it does not make their lives any easier."
The consortium of retailers called Merchant Customer Exchange (MCX) also includes Best Buy and Target, among others. Each member paid $200,000 to $500,000 to be part of the consortium. Leaving the group is free.
CurrentC is designed to work on any phone and will offer a loyalty program. Users can also make payments in a single transaction. Unlike Apple Pay that connects to credit cards, the new payment system connects to the customers' bank accounts.
MCX will have a meeting with two credit card companies, but did not mention if those are Visa and Mastercard.
"We expect that all cards will be welcome at CurrentC," chief executive Dekkers Davidson said on a conference call.
MCX's system was hacked recently, but CurrentC was not affected, ABC News reported. The cyberattack compromised some email addresses; no personal or financial information was involved. The group has reached out to the email addresses to inform them of the breach.
Mobile payments are expected to grow in the next five years, but analysts said that there is no guarantee that consumers will find it more convenient in the long run compared to cash or card payments.
Google and Paypal were some of the firsts to introduce the system in the past, but both failed to kick in.
