Before Apple Pay, MCX was trying to change credit card processing fees.

Before Apple Pay, MCX was trying to change credit card processing fees.

Long before Apple Pay, big retail stores were creating a way to avoid paying the typical 2% to 3% fees paid to credit card processing companies.  They called it Merchant Customer Exchange (MCX), and created a mobile payment app called CurrentC.

Retailers hoped that if enough them used MCX, they would be able to avoid paying credit card fees by processing payments through Automatic Clearing House transactions, which go through bank accounts with smaller fees. CurrentC uses QR codes on a cashier’s screen or a phone.  Here’s a great article about CurrentC on Business Insider, and another on Tech Crunch.

Former Walmart CEO Lee Scott said, “I don’t know that MCX will succeed, and I don’t care. As long as Visa suffers.”

While CurrentC is highly unlikely to catch on, here is the truth in today’s world:

1. Everyone has to pay Visa/MC interchange, even the worlds largest retailers.
2. But you don’t have to pay 2-3% to a card processor.  The actual interchange is much lower, you just have to get the processors hand out of your pocket
3. These “solutions” are all merchant focused, but they ultimately rely on the consumer, and the consumer wants convenience.
4. Consumers don’t care about saving Walmart or Exxon a couple percentage points.
5. This program relies on debit cards and bank accounts.  Americans use credit to sustain their lives.  People like to borrow money and get rewards for doing so.  People may not want to use their debit card for a large transaction
6.  When customers use a credit card they generally spend more money on each transaction.  By forcing them to use actual money in their bank account you could negate this over spending effect.  This is often overlooked when accounting for interchange fees.
7. Retailers will lose business if they stop accepting credit cards.
8. Fewer than 1 million people have the alternative, Apple Pay, on their phones.  There are about 600 million credit and debit cards in the US, but only a tiny fraction of retailers accept Apple Pay. Retailers like Walmart are already refusing to accept it.

I once viewed this MCX exchange as a long term threat to the processing industry but the more I read, the more I realize that they are missing the point.  The point is that consumers want to use credit cards, and retailers should find the cheapest way to take them – Payment Depot is the way.

Credit card processing companies charge high fees because credit cards are easy for customers to use, and customers like using them. They also provide security and other services to customers and merchants.

So the best thing for retailers to do is to find the cheapest way to accept credit cards, and for 95% of businesses, that’s Payment depot.  We give you the True Cost from Visa, Mastercard, American Express, and Discover.

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