Dekkers Davidson (CEO, MCX)

ladies and gentlemen please join me in welcoming deckers Davidson CEO of mcx good morning and thank you for joining me this morning I’m excited to have the opportunity to finally speak to you directly about mcx and currency we have a lot going on now a lots been happening last two or three weeks for us and I’ve been reminded of an Oscar Wilde quote that came to mind some of you probably are familiar with it here’s how it goes there’s only one thing worse than being talked about that’s not being talked about so we at currency are flattered by the attention and excited to tell you our story so this is the first time that I’ve had a chance to get before a public group to tell you what we’re all about and it’s the right time for us to do that let me start by telling you this is real this is happening we are in market we’re doing transactions we have launched with merchants in several American cities with their employees and associates it’s been a great way for us to test our product to test our people to test our systems and to test our partners to do it an environment before we go live with a public which will be happening very very soon so we’re learning a lot from the consumers the thousands of consumers have been using the currency app at their stores now this innovation business this experimentation business this business of creating new things brings some bring some things along with it and like other entrepreneurs before us many initially ignored us thought we are pursuing the impossible dream it could not be done some having mocked us or laughed at us and that’s fair view of people are now attacking us and what I would tell you is all of that is to be expected it all comes with the territory when you challenge the status quo we’re undaunted and we’re moving ahead to bring a better value for American to American consumers through a mobile commerce network and our mobile commerce app so who is mcx who is the merchant customer exchange well we’re a start-up venture based in Boston which has become a hotbed for mobile payments and mobile commerce activity we have staff all over America the leadership team was put in place just a little over a year ago we’re actually adventure with less than 100 full-time employees but don’t let that mystify you we actually have 80 plus merchant brands we have teams nearly equal to our size so we magnify our presence with our merchants importantly because this whole business of mobile commerce and mobile payments it’s a partnership game if anybody thinks they can do it by themselves I think they’re mistaken we’re partnered with several entrepreneurial companies who built great best in breed technology to bring to market we’re also partnered with some of the best established technology partners we’re also now partnered with credit card issuers we’re partnered with processors and merchant acquirers we’re also partnered with point-of-sale providers and also leading prepaid issuers so the mcx team is a partnership team that spans all sectors of the mobile payments and commerce space and I’m proud here to today to stand and tell you our collective story now the merchant customer exchange mcx was founded by a tea merchant brands it was a merchant’s idea about three years ago to come together to see if they could innovate for their consumers because up until that point in time and even now I think the merchants thought we’re going to have to take this on and figure it out we know our consumers best these merchants represent every major vertical and American commerce from mass merchants to grocery stores and grocery chains the drugstores to in sit-down dining restaurants to quick service restaurants convenience stores fuel travel sector as well as specialty retail we have merchants that span the entire landscape the mcx merchants today represent nearly a third of the American discretionary spend every week so this is where Americans do a lot of their everyday spending so currency is a mobile commerce network and is also in

building a new back-end payment system to go along with it I’ll talk more about what we mean by mobile commerce in a moment but I want to be clear we’re building an open network here consumers will have a choice in terms of how they engage with currency they may choose to do it through merchant proprietary apps many of our merchants have terrific apps where they’ve already engaged many of their loyal customers consumers also could engage with us through the Currency Act which will essentially be a horizontal app to work across all merchants importantly consumers can also engage through bank apps our bank partners will have the opportunity to embed the currency capability in their app so if consumers that prefer to do their shopping and payment through banks will have that opportunity and I could also imagine several other additional apps that may want to take advantage of the currency capability we’re building something that is open for all because American consumers need to have the choice to how they engage now the inspiration behind mcx came from many sources I’ll speak for a moment about the inspiration I’ve had and I think the inspiration for many of you in this room all of us had been born in the dawn and that the growth of the digital age and for me that moment occurred just about 30 years ago if you remember the 1984 Super Ball but many remember and most remember the iconic advertisement that ran at halftime i believe it was then the first million dollar ad showed a citizen marching through town who became a warrior to ultimately challenge the status quo there was a better way said this company for consumers to use technology technology should be the servant not the master well so that was how Apple computer burst onto the scene an apple clearly has risen to become one of the world’s most admired companies and a company that’s done terrific things in terms of helping consumers embrace new technology now Apple started the garage and a lot of the digital entrepreneurs also started in garages and that’s been part of the legacy of the digital era but honestly most innovation occurs in lots of places in fact in Main Street America right out on Main Street in point you know plane plane public view or in the skies of America Southwest Airlines Herb Kelleher had a better idea to create a friendlier airline for America a different operating system a different way to move people around America Herb Kelleher and the Southwest Airlines chaff staff and team they changed the world for consumers and they had to fight a lot of the establishment to do that in fact just recently shed one of the last vestiges when the right amendment was finally retired Southwest Airlines is a founding member of mcx with Sam Walton started with his one store in Northwest Arkansas he had a vision to create a better way for Americans they could save more money and have a better life that company today has grown to be Walmart 50 years ago it was one entrepreneur and a family that was starting out to do something great success was hardly assured a lot of convention had to be broken today nearly thirty percent of Americans shop every week at Walmart they’ve learned how to attract customers and make a valuable experience dunkin brands which is based in the boston area started even earlier bill rosenberg started duncan and it’s reinvented itself many many many times and today is the number one player in the coffee category is measured by consumer loyalty and they’ve been a pioneer as well in the whole development of mobile app and mobile loyalty a merchant that’s not part of MCX elo’s part of the early founding i think is clearly distinguished itself as the pioneer in this whole mobile commerce space and we don’t think I don’t think it’s an accident that it took a merchant to do that and of course I’m referring to Howard Schultz and Starbucks which has the leading mobile commerce app in America they do 1 million transactions every day using QR codes and now seventeen percent of all transactions at starbucks occur through the mobile device to create a better loyalty program a better consumer experience so this innovation game doesn’t just belong in garages it’s just not on phones it’s actually out on Main Street so the merchants of America see

their moment to innovate for their consumers to take the mobile revolution and make it work even more for their consumers so let’s talk about the currency solution what is it we have a single vision here to directly connect merchants and consumers for deeper and more personalized relationships that happens today with merchants that have loyalty programs that have private label programs have terrific everyday low prices merchants have learned how the mcx merchants have learned how to build a base of 450 million Americans visit those stores collectively in a week almost two-thirds of the adult population goes in at least one or more times they want to take the mobile world and make it better for consumers make it richer make it more personal reduce friction so the most important question that we need to address is what’s the consumer value proposition all of us have habits some of us have habits for good reasons some for bad reasons either way they’re our own reasons and it’s nobody else’s business we’re going to change our habits there’s got to be very compelling reasons to do it there’s four elements that we think will really move the needle here for consumers and the first is the biggest you’ve got to provide personal benefits that are compelling save me time save me money save me time and money not just a little but a lot so what do I talk to you about here well our platform will have digitized receipts so consumers contract they’re spending and can know where they shopped what they purchased but how many of us have been online at a grocery store or pharmacy or any store where the person in front of us is fumbling for coupons searching for their loyalty card as you’re waiting and waiting to complete your shopping journey the person in front of you is frazzled they’re anxious people behind or frazzled and anxious the currency solution brings that all together so that when you’re shopping and you’re at the point of payment your coupons your loyalty card all get integrated into the point of sale there’s not other buttons to click other cards to grab it’s all in one you’ve got to make it simple you’ve got to make it convenient and you’ve got to really provide an opportunity so that consumers can get the value that merchants actually want to give them the world we live in today is built on friction and nobody likes that consumers don’t like it merchants don’t like it we’ve got to end that friction so you can get full value in your loyalty programs full value and your offers and coupons and it’s got to be easy it’s got to be easy to do so personal benefits starts the second is we have to have and we will have multiple forms of payment and here there have been several misconceptions about what mcx is all about 75% of the transactions that occur at the 80-plus merchant brands are done where consumers use their own money cash check debit card gift card prepaid card we have a solution for seventy-five percent of those transactions on day one the balance will use open loop cards or private-label cards we’re going to have private label and we will have open loop credit cards as part of our program when we launched we’ll have more and more over time because our merchants focus on everyday spend we also care and think a lot about the unbanked and the underbanked twenty-eight percent of Americans are either in that category that is unbanked or underbanked by having reloadable gift cards reloadable prepaid cards we’re going to appeal to those consumers as well we also recognize the Millennials are moving more and more towards using no credit so we want to have solutions for them to what I want to make clear as consumers can choose their payment preference by merchant will have the option for open-loop cards in our solution on day one consumer will choose what they want here so that’s the second part broad forms a payment the third is that we have to have a platform that’s secure and puts the privacy of consumers front and center and we have no information will be stored on a consumers phone no information on the consumers phone we use credible best-in-class secure cloud tokenization and dynamic pay codes dynamic QR codes to send low value tokens to and from the cloud so the transaction is Karrde occurs or happens in the secure cloud consumers also and this is very very important from a privacy perspective consumers will have the choice how they want to engage consumers want to remain anonymous to

merchants they will have that choice they must have that choice consumers want to tell the merchant more and many do because they enjoy the loyalty programs and the offers and the engagement that they get they can we created a privacy dashboard that makes it easy for consumers to turn on or off how much information about themselves goes to merchants now a big misconception about currency is that we do not require a driver like driver’s license or a social security number to register it’s a misconception it’s been promoted by others it’s never been the case the final point I’d make about our value proposition is that consumers want a mobile solution that works where they shop not just at one merchant not just to the handful so we will provide consumers options where they frequently shop so there’s multiple touch points a week where they already shop as I indicated earlier one-third of discretionary spending in side the merchants that are already part of mcx and we look forward to bring more on because mcx is intended to serve all merchants large and small we also have a solution that works for consumers where they want to shop it’s important for us to have multiple players in each vertical we have multiple grocery stores we have multiple drug stores we have multiple mass merchants consumers want that choice they demand it the final point I’d make about the currency solution is it will work on nearly all phones all iOS phones all android phones that represents about ninety three percent of the devices that are enhanced sets the hands of consumers today there will be no need at all to buy a new phone to use the currency app so let me talk just for a couple of minutes about why we think currency will succeed because we built currency to succeed for consumers but also for merchants for consumers therefore benefits personalised benefits broad forms of payment security and privacy and the fact that it’s widely accepted for merchants this is an opportunity for merchants to directly engage with the consumers that they know and of whom they built relationships with four years in some cases decades it’s also a platformer merchants can own their own data protect their own data and provide a platforms to ensure that consumers can protect their privacy so there will be no third party in between here that will take away the relationship that each merchant has with their consumer the proof I think though is in the experience in the three years since mcx was formed in the last 15 months since the team and the technology put in place a lot of efforts been put into creating fabulous use cases it’s not simply the experience on your smartphone it’s actually what your experience is as you walk into the store as you think about your shopping journey while you’re in the store and after words so very quickly when you’re in a mass merchant or grocery store a single scan allows you to apply your coupons your loyalty program removing that frazzle that anxiety that occurs for not only the consumer but the people online as well as the point-of-sale clerk we’re bringing that together right now in our our programs that are a market another example would be pay a table most of us we go to have a nice meal at a restaurant we go for the food we don’t go for the payment experience yet the payment experience takes a lot of hassle at the back end we pay at the table solution that we’ve developed the consumer can ask to pay and then can pay on their own schedule they don’t have to repeatedly call a server over to ask for more information to ask for their check back they can pay at the table remotely from the point of sale system and be on their way we have a lot of fuel merchants in mcx paying at the pump probably is one of the most challenging consumer experiences how many of us live in cold weather where we have to get out put our card in then type in our zip code wait for authorization how many people in hot climates have to do it where it’s very uncomfortable it’s not safe for some people with our solution you’ll be able to pull up to the pump the pump will recognize you because of the solutions we built you’ll be authorised the pump will be activated you won’t have any time spent managing your payment authorization or your payment credentials we haven’t solved for the fact that the gasoline still has to be pumped but you have to get out of the car and pump that but you probably provide more security and we provide more convenience and incidentally what an interesting way for fuel merchants to think about creating a cash price by paying for currency where you don’t have to walk into the store put down your forty dollars go back pay your you know and pump so there’s great ways here where you can save consumers time and

money I could talk about many and any other use cases certainly by an advanced pick up in-store drive through the list goes on and on but we spend a lot of time thinking about these use cases so as I finish up here like to just offer a couple of couple of words this this is the ultimate example of the Chinese proverb that we live in interesting times it doesn’t get much better than this as far as I’m concerned but only time and consumers will determine the winners here with all due respect to my merchants to the great technology companies that are here to the fabulous banks that are in the room to the networks and all of us the American consumer is going to choose the winner here we’re excited to be building our momentum we’re really thrilled where we are we also know that if you want to change the status quo you have to challenge the status quo and you’re going to get a little back talk when you do that and that’s just fine with us we’re competent and determined we also bring a sense of unity to this exercise my father was an inventor and a very successful entrepreneur took him almost the balance of his career to achieve that success so I watched this as the oldest son my dad once told me and I’ve tried to keep this in mind you can start out in life humble or you can end up humble the benefit he said of being humble at the beginning is you actually make more friends but more importantly you’ll learn more and what we need here is we need you millet II honest-to-god humility to listen to American consumers the consumers will tell us how to succeed here we can be only so smart we have to be smart enough to listen so in closing I’ll say the winners and wishers will be determined by the consumers of America and we’re thrilled to be in the arena and I thank you this morning for your attention and your time