More than a dozen big merchants announced Wednesday their plans to jointly develop a mobile-payments network that will battle similar services from Google Inc. and other companies.
Wal-Mart Stores Inc., Target Corp., 7-Eleven Inc. and Sunoco Inc. SUNare among the companies hoping to elbow their way into the burgeoning market that turns smartphones into devices for making purchases.
The push by merchants, called Merchant Customer Exchange, or MCX, is at an early stage, and the companies haven’t set a launch date or hired a chief executive. A CEO search is under way. It isn’t clear how much money each participating merchant is contributing to the network’s development.
Financial institutions and technology firms are pouring billions of dollars into the development of mobile-payment systems that operate as so-called digital wallets.
While few shoppers use their phones as mobile-payment devices, industry executives are convinced that consumers eventually will be just as comfortable buying with their phones as they now are when using credit cards and debit cards.
The technology relies on applications that a customer can download onto a smartphone and then make purchases in a store by tapping the phone against a reader placed by the cash register.
Mobile-payment transactions are expected to surge to an estimated $600 billion world-wide by 2016, up from $172 billion this year, according to market-research firm Gartner Inc. A Federal Reserve report in March said 87% of Americans have a mobile phone. Nearly half of those are smartphones, cellphones with computer applications and Internet access.
Among people with a mobile phone and bank account, 11% used mobile payments in the previous year, the survey found.
The new mobile-payments efforts already is running behind rivals such as the Google effort, called Google Wallet, which began operating last year on the technology company’s Android devices.
Isis, a collaboration of mobile carriers AT&T Inc., Deutsche Telekom T-Mobile USA Inc. unit and the Verizon Wireless joint venture between Verizon Communications and the U.K.’s Vodafone Group VOD, will start trials later this summer in Salt Lake City and Austin, Texas.
And in another sign of the growing interest in mobile payments, start-up Square Inc. said last week Starbucks Corp. will invest $25 million in the company and use its technology to eventually process all credit and debit transactions at about 7,000 Starbucks outlets in the U.S.