Target, Walmart and Co.: why leave mobile payments to others?

Some of the biggest retailers have had enough of payment companies hitting them up with their own ideas of how they should implement mobile payments. Target (s tgt), Walmart (s wmt), Best Buy (s bby), 7-Eleven and about a dozen others on Wednesday announced they have banded together to form a joint venture called the Merchant Customer Exchange, which will eventually create a mobile wallet system accessible through almost any smartphone.

The news follows up on a previous report in March that these top retailers were collaborating on a payment system. Other partners include CVS (s cvs); Darden Restaurants (s dri); HMSHost; Hy-Vee; Lowe’s (s low); Publix Super Markets; Sears(s shld); Shell Oil Products US (s shld); Sunoco (s sun). The MCX system, whose launch date was not been announced, will start by providing the retailers with a secure payment system that will integrate their own offers, promotions and other programs. The hope is that merchant partners and consumers will find the service engaging, cost-effective and efficient, going beyond what is currently available today.

“MCX will leverage mobile technology to give consumers a faster and more convenient shopping experience while eliminating unnecessary costs for all stakeholders,” said Mike Cook, Walmart’s corporate vice president and assistant treasurer in a statement. “The MCX platform will employ secure technology to deliver an efficiency-enhancing mobile solution available to all merchant categories, including retail stores, casual dining, petroleum and e-commerce.”

It sounds like consumers who utilize the MCX wallet will be able to use it at all the merchant partners, though we’ll have to hear more details to be sure. So far, there is little information about how the actual system will be deployed and how it will work with the current hardware in use with the retailers.

So why build out a new payment system? Well, the merchants can stand to save money in a couple ways. By banding together, they may be able to get better interchange fees from the credit card networks. And in a mobile wallet, they may be able to steer consumers to use their own issued cards or prepaid gift cards. And if an issued card is pulling funds directly from a bank account they can avoid card fees. You might see retailers offer deals on the spot for consumers who fund a purchase using their bank account through their mobile wallet.

Taking control of a mobile payment system also keeps retailer data out of the hands of a third party. Google (s goog), for example, is trying to get at the purchase data through Google Wallet. But no merchants want to willingly give that up that information.

The big question is: will these retailer welcome rival mobile payment systems? The retailers are in a position to really frustrate other payment ventures if they want to, similar to how Verizon (s vz) kept Google Wallet off the Galaxy Nexus for months. My sense is the merchants won’t be in any hurry to support Isis or Google Wallet but over time, they will integrate them if there’s enough momentum behind another mobile payment system. This highlights just how competitive this market is and how much jockeying between the major players is still to come. But for consumers, it’s just going to be even more confusing as they encounter a sea of mobile wallets that work fully in some locations but not others.