Evan Schuman's StorefrontBacktalk

How could that work? Suppose (once everything is in place) MCX chains tell their loyalty customers that they now instantly have charge (not credit) accounts as part of the loyalty program. You just ask to charge your purchase to your loyalty account at checkout, and you’ll get a bill at the end of the month.

If the customer opts to do that, the charges (but not other CRM data) go to MCX. At the end of the billing period, MCX bills the customer for all the purchases made in this way—ganging purchases from Walmart, Target and other chains onto a single bill.

The customer then pays that bill (in full, because it’s not a credit account) with cash (at any MCX merchant), check, ACH transfer or Visa/MC/Amex/Discover/Diner’s Club. With the first three, there’s no interchange. With the last one, there’s a single large transaction with MCX, which theoretically should reduce the interchange hit slightly.

Then MCX deals with divvying up the income and dealing with deadbeats (which should be less likely because the loyalty data should help identify who’s a lousy risk).

Could it work? Maybe. The technology isn’t the hard part—it’s really just another back-end billing system. Customers might go for it in exchange for another two weeks on average to pay the bill. Besides, they like retailer loyalty programs better than they like banks. For retailers, there’s at least a prayer of actual interchange relief, along with competitive pressure on Visa, MasterCard and the banks.

In fact, except for the loyalty element, this works something like PayPal’s in-store payments effort—the difference being that retailers have a real reason to push something related to their own loyalty programs. Paying via PayPal and giving away CRM data? Not so much.

What’s missing from this picture? Trust. Sure, there’s no love to lose between chains and the card brands and banks. But a new billing system that’s run by a group of competitors? Yeah, that’ll sure raise the comfort level of the finance folks who are pushing MCX (and have also pushed the lawsuit that gave us the interchange settlement).

Any payment that’s delayed, any dispute resolution that’s expensive, any cost apportionment that’s unfair in any retailer’s eyes—this isn’t just Visa giving you grief, it’s Walmart and Target and your other competitors handling your chain’s money. Paranoia, anyone?

That, by itself, reduces the odds that MCX can make a real difference in the interchange wars, with a loyalty-based payment scheme or anything else. It doesn’t help that Walmart has been throwing its weight around in the group (now Walmart’s competitors know what Walmart’s suppliers feel like), and that the most likely source of the MCX technology will be some startup Walmart bought.

Still, that’s a bullet chains may have to bite if they really want to fight back on interchange. It won’t go away or go down on its own, and lawsuits and lobbying are a crapshoot. In the end, it may come down to which it is that chains hate more: Visa or Walmart.