Several large retailers, including Wal-Mart, Best Buy, 7-Eleven and Target, will create a mobile payment company that will allow customers to pay with smartphones.

Called Merchant Customer Exchange (MCX), the network will be available as an app on "virtually any smartphone and will initially focus on enabling merchants to provide offers and promotions."

Competition for mobile payment technology is heating up as large retailers, start-ups and wireless carriers and credit card companies are muscling in on the lucrative market. Worldwide mobile payment transactions will total $171.5 billion in 2012, a 62% increase from $105.9 billion last year, and could reach $617 billion by 2016, according to research firm Gartner.

Other merchants in this network include Sears; Lowe's; CVS/pharmacy; Darden Restaurants, which owns Olive Garden and Red Lobster; HMSHost, an owner of hotels; grocer store chain Hy-Vee; Publix Super Markets; Shell; and Sunoco. Other retailers will be added in the coming months, the company said.

"(MCX) is uniquely qualified to offer the most comprehensive mobile payment options for consumers," said Terry Scully, Target's president of financial and retail services, said in a statement.

Using the app to deliver promotions and payment mechanisms will also cut "unnecessary costs" for merchants, said Mike Cook, Wal-Mart's corporate vice president and assistant treasurer, in the statement.

The initial retailers that are part of the new company account for about $1 trillion in annual sales. More retailers are expected to join in coming months, the Irving, Tex.-based group said. The joint venture, which is looking for a new CEO, hasn't determined a launch date.

Google and large wireless carriers are further along in their development of apps and devices that will accept smartphones at retailers' checkouts. They rely on a technology standard called "near-field communication" (NFC) that enables radio communication between phones and other devices that are in close proximity, without touching.

Mobile payment advocates say the technology is secure and lost credit card information can be erased more quickly. But privacy experts and the Federal Communications Commission have called for more studies on the NFC technology.

Google Wallet, which was introduced last year by the software giant, is compatible with all domestic credit cards. Once its users input their card information in the Google Wallet app, they can wave their NFC-equipped phone at a contact-less reader pad, such as the ones branded by MasterCard's PayPass and Visa's payWave.

Verizon Wireless, AT&T and T-Mobile are jointly launching a competitor called Isis, a digital wallet in your phone that can be swiped at retailers' contact-less terminals. Isis will likely launch this month in Salt Lake City and Austin with national large retail chains and smaller merchants.

Starbucks also announced last week that it'll expand pay-by-phone options by partnering with Square, a mobile payment start-up. Their initiative, to be launched this fall, will allow customers to pay with a Square app on their phones at about 7,000 company-owned Starbucks stores.

USA Today