In various venues — our Payments Bootcamp, our private client sessions or our merchant group meetings — we have talked a lot about MCX, the Merchant Customer Exchange initiative, created by a number of the largest US retailers to establish a merchant-centric wallet and payments solution. In these discussions, I’ve often joked about the name, since the last thing we think this is about is the participating merchant’s exchanging customer data as the name implies. But it dawned on me yesterday, MCX makes perfect sense if you think of it as enabling merchants to better exchange customer spending habits with manufacturers, consumer packaged good manufacturers (CPGs) and others to create more timely, relevant and compelling offers to those merchants’ customers!

Manufacturers are willing to spend a lot of money to attract and reward customers, but have little insight into individual customer behavior — thus the old adage that “half of our ad spending is wasted, we just don’t know which half”. What if the MCX service is able to help the participating retailers throw their customers really great, targeted offers? What would that be worth to those merchants? To manufacturers? To CPG’s?

So, here’s my back of the envelope design:

The MCX server sits between the consumer, merchant and the interested third parties: manufacturer (think Panasonic), CPGs (think J&J), and other service providers (think car loan providers, insurance companies, etc.) The MCX server, with the customer’s permission, plays Santa Claus — since it knows what the customer’s been up to, it can broker and exchange that data with a third party to throw a relevant third party ad or offer on the spot. Win, win, win: the third party has an effective ad spend, the merchant has either an additional sale or some payment or residual (collected by MCX), and the consumer gets a terrific deal. What’s not to like?

Now, maybe my MCX scenario is all wrong, but I tell you, if the merchants behind MCX haven’t at least thought of the above, then I can recommend a payments strategy firm that will help them flesh it out!

This post was written by Glenbrook’s Jay DeWitt.