Apple Pay may be getting all of the attention, but the carriers’ competing mobile wallet Softcard isn’t just rolling over. The Android smartphone payments platform formerly known as Isis is now up and running in 14,000 McDonald’s locations in the U.S., and can be used to pay for Big Macs and molten-lava filled pies at both the counter and the drive-thru.
The launch isn’t exactly a surprise since [company]McDonald’s[/company] was one of Isis’s original trial partners in its Austin and Salt Lake City test markets. Gigaom’s Stacey Higginbotham was making payments with an Isis-enabled Android phone at McDonald’s all the way back in 2012. But McDonald’s wasn’t part of Isis’s commercial nationwide launch in 2013. Since then, however, the newly renamed Softcard has been expanding into some major retail chains, including Subway’s 26,000 U.S. locations.
No matter what you think of Softcard and the carriers’ attempts to manage your wallet, this is good news for the mobile payments industry. It shows many of the biggest retailers are sitting out the turf wars that have plagued mobile turf wars that have plagued the mobile payments space. If you want to make a contactless payment at McDonald’s you now have three options: Google Wallet and Softcard on Android and Apple Pay on the iPhone 6 or 6 Plus (you can also buy a special Softcard case if you’re really committed to using it on the iPhone). McDonald’s may soon have a fourth means as well. It’s rumored to be working on its own NFC smartphone payments app.
What McDonald’s is saying it wants to make buying a Quarter Pounder and fries as easy as possible for customers so it’s not pinning them down to a single mobile wallet. After all, this whole mobile payments thing works only if it’s both ubiquitous and convenient. If have to use a different mobile wallet at every mobile retailer I go to, then screw it: I’ll just stick with plastic.
Unfortunately there is a big chunk of the retail industry that doesn’t buy that logic and is trying to lock their customers down to a particular wallet. I’m referring to the Merchant Customer Exchange (MCX), a consortium of some of the country’s biggest retailers — including [company]Walmart[/company], [company]Target[/company] and [company]Best Buy[/company] – that recently announced its mobile payments system, CurrentC, would launch in 2015.
MCX retailers use the same point-of-sale terminals and back-end software as Apple Pay, Softcard and [company]Google[/company] Wallet and their payment processors support those services, as exemplified by the fact that several MCX members inadvertently started accepting Apple Pay transactions at launch even though they weren’t officially Apple partners. [company]Rite Aid[/company] and [company]CVS[/company], however, shut off Apple Pay capabilities a few days later, just as MCX members Best Buy and 7-Eleven banned Isis/Softcard from their payment terminals last spring. Target is actively participating in Apple Pay on the in-app payments from the phone. It just can’t work with Apple on in-store payments because of its MCX ties.
MCX probably has plenty of financial incentive for doing so. CurrentC will lean heavily on payments linked directly to customer’s checking account, which will ultimately save its merchants on transaction fees. Smartphone payment systems like Apple Pay and Softcard mean more middlemen in the payment chain, adding complexity to every transaction and reinforcing or even increasing the per-transaction fees that make credit and debit payments tick.
But ultimately any payments system that isn’t cash or barter is trade-off between cost and convenience. Some day we may actually find ourselves in a world where smartphone contactless payments are ubiquitous and consumers can leave their plastic cards at home. If that happens and companies like Best Buy and Target are still limiting their customers’ options, then those customers will start looking elsewhere for their shopping needs.