A group of big retailers that includes Wal-Mart Stores Inc, Target Corp and Japan's 7-Eleven is developing a mobile payment network, adding to the proliferation of options that let consumers pay with smartphones.
The system, known as Merchant Customer Exchange, is a retailer-led initiative that would match similar services from Google Inc, which began operating its own system last year on its Android devices.
The group of retailers, which account for about US$1tril (RM3tril) in annual sales, wants to make sure it has a say in the development of standards for mobile payments, Terry Scully, Target's president of financial and retail services, said on Wednesday.
"What we are looking for is a broad, seamless experience across all retail formats," Scully said.
Mobile payments are expected to rise nearly four-fold to more than US$1.3tril (RM3.9tril) annually by 2017, a report from Juniper Research said on Wednesday.
The group is in discussions with financial institutions, technology companies and telecommunications providers to set up a backbone for the payment system, Scully said, but he could not forecast when the system would be in stores.
"While speed to market is important, we really are focused on doing it right," Scully said.
The retailer group is joining a crowded field.
Earlier this month Starbucks Corp took on the mobile payments model, employing Square Inc to process payments at its US coffee shops.
In May, eBay Inc's PayPal unit announced deals with 15 retailers to use its system for mobile payments.
"These big retailers are doing this because they are not happy with the solutions being pushed on them by the market," said Rick Oglesby, a payments expert at consulting firm Aite Group.
If these merchants can agree on a common standard for mobile payments, the venture could grow very quickly, he added.
"This creates a big opportunity," Oglesby said. "A system designed by merchants for merchants could have a big leg up over the competition."
The Merchant Customer Exchange is working on offering merchants such as retailers, gas stations and restaurants a way to integrate their promotions into the payment plan, which it said would be available through virtually any smartphone.
The swift rise of mobile payment processing tools in recent years has led some observers to forecast a future in which wallets are left at home. That could transform retailing, but also create security issues, particularly if mobile devices are lost or stolen.
About a decade after they were dreamed up by engineers and marketers, mobile wallets are still far from commonplace in the United States, stymied by industry infighting, consumer tastes and regulatory hurdles.
That has not stopped banks, phone makers and technology companies - fearful of being left behind - from trumpeting the concept and pushing the argument that any solution can succeed if it speeds up checkout times, is secure and easy to use.
Shoppers abroad, especially in Asia, can already wave cellphones at the check-out counter to pay for everything from groceries to gasoline.
Now, a growing number of mobile operators, banks, technology companies and card processing networks like Visa Inc, MasterCard and America Express are vying to gain a foothold in the still-small but high-potential US mobile payments market.
Most mobile payments services, like those offered by Square and PayPal, sit on top of the payment networks run by Visa, MasterCard and American Express.
But these processing giants are working on their own mobile payment services because they do not want to lose contact with the consumer, Oglesby explained.
"Payments players use the term disintermediation - someone is stepping in between them and the customer and adding value," he said. "Visa, MasterCard and Amex are worried that they may become the raw materials that to go into the finished product - and right now the finished product is looking like PayPal and Square."
Three of the top US mobile carriers - AT&T Inc, Verizon Wireless and T-Mobile USA - are also looking for bank and network partners to make their Isis mobile payments venture grow.
Currently, credit card companies charge merchants transaction fees - and mobile payment players like Square and PayPal have to exact such fees too.
Other companies, such as AT&T and phone makers from Research In Motion to Apple Inc, are likely to demand a cut of sales. This puts U.S. retailers in the uncomfortable position of possibly surrendering more margin.
Companies involved in MCX along with Wal-Mart, Target and Seven & I Holdings Co Ltd's 7-Eleven include Alon Brands, Best Buy Co Inc, CVS Caremark Corp, Darden Restaurants Inc, HMSHost, Hy-Vee Inc, Lowe's Cos Inc, Publix Super Markets Inc, Sears Holdings Corp, Shell Oil Products US and Sunoco Inc.
The group said it planned to announce more members in the coming months. - Reuters