Evan Schuman's StorefrontBacktalk

The $1.38 trillion in revenue that group organizers have pointed to, though, is also not without its footnotes. Participating companies will certainly have to pay money, and the group—or, more precisely, the majority of the group—will dictate how that money will be used. But there is nothing that will force retailers who may disagree with the group’s decisions to embrace it.

Another important issue that the group must deal with is legal, specifically anti-trust. Our legal columnist, and former head of the U.S. Justice Department’s high-tech crimes unit, Mark Rasch, said the group could avoid anti-trust problems, but would have to proceed carefully.

“Let’s say this new retail consortium develops an awesome payment-processing technology that securely uses a user’s cell phone to accept payments remotely. The retailers develop wicked cool tech to make it happen. So a Target engineer comes up with one idea, a Wal-Mart computer scientist another and a Sears employee a third. Who owns these patents?” Rasch asked. “Who decides which patented processes go into the final mix? How are royalties or licensing fees handled? In a retailer-owned consortium, a large retailer like Wal-Mart now has another tool—the patent—to use to reward or punish other retailers, which happen to also be its competitors. Although transferring the ownership of patents to an ‘independent’ third-party company may help, the influence of the retailers may make the process anticompetitive. And that may evoke the ire of the Justice Department.”

Rasch said much of this also depends on how broadly “retailer” is defined. “If, by retailers, we mean anyone who accepts money for goods and services, then we would be including bankers, lawyers, accountants and the government as ‘retailers’ and, therefore, potentially part of this consortium. In the implementation of whatever technology the consortium comes up with, the technology and the fees charged for its use must be to a great extent either nondiscriminatory or at least the discrimination must be rational. Thus, a technology developed by big-box stores like Target and Wal-Mart should not punish online sales or mom-and-pop retailers. It should be available to all.”

Rasch offered an example: “A small retailer may come to the table with a wicked awesome payment system, but Wal-Mart might say, ‘No, we can make more money on the system we propose’ and adopt that as the standard. Many companies were put out of business during these standards wars. But when the industry itself does this, it may raise antitrust issues.”

And if the project can survive the politics, legal and technical issues, and fractiousness of more than a dozen huge competitors, the consortium’s retailers will have to face another problem when its system is ready: It will still have to deal with the card brands for the foreseeable future.

Floating a new payments platform with better security, no PCI, lower interchange costs, improved data sharing and more retailer-friendly dispute resolution may sound good (though it probably sounds most appealing to the financial types pushing the consortium, who won’t have to deal with pesky technical details). But actually telling customers they can’t use their plastic rectangles at big chains? That won’t fly far.

Until they’ve disposed of Visa and MasterCard, big chains (and their financial management) will still be stuck with PCI, interchange and all the rest. But how hard could that be?

Maybe they should try something much easier first—like, say, getting rid of magnetic stripes.