Big Retailer's New Clunky Attempt To Kill Apple Pay And Credit Card Fees

[Kablooie]

Apple Pay is a new store payment system available on iPhones that allows you to securely pay at stores by simply holding up your phone near a terminal. Your fingerprint while holding the phone is your personal verification and the store only receives a unique one time code that they use to process the sale. None of your personal info or credit card numbers are transmitted so the possibility of credit card info theft is eliminated.
Android phones that have an NFC (Near Field Communications) chip can also use the terminals by inputting a personal id code.

These terminals are being shut off in Best Buy, Walmart, Lowe's, and many more stores because they are part of a consortium of merchants that are developing their own payment solution known as CurrentC which will be available some time next year.

CurrentC requires you to open a CurrentC app, line up and scan a paycode with your phone's camera then show it to the cashier who scans the paycode from your phone. If the image isn't clear enough you can type in your info instead.

CurrentC is not connected to your credit cards but draws money directly from your bank account thus saving the merchant credit card fees. That's the whole justification for this new awkward system, to eliminate credit card fees.

So a slew of stores, including CVS and Rite-Aid are shutting down their NFC terminals in the hope of preventing Apple Pay from becoming popular and forcing people to use their awkward, less secure but cheaper for the merchant system.

There are rumblings of boycott within the tech community.

More:
http://techcrunch.com/2014/10/25/currentc/

[msongs]

1. dear apple lovers: it's called "free market competition" nt

[DisgustipatedinCA]

8. Keeping Apple from competing is free market competition?

News to me.

[Agschmid]

11. +1

Hey if I can't pay I won't buy. Not a problem for me (although I see how it could be for others).

[NCTraveler]

12. Apple is not being kept from competing. nt.

[Action_Patrol]

14. Am I reading this wrong?

"These terminals are being shut off"

That means to me that the terminals exist and they are stopping them to prevent Apple from using them.

How is that not keeping them from competing?

[Atman]

16. ^^THIS^^

But it's APPLE, so it's okay to hate on them.

[NCTraveler]

25. Another vendor is offering a service that will save more money.

They are going with that instead of apple. They are not being stopped from competing. The stores are going with a system that saves them money. That is the definition of competition.

[Action_Patrol]

31. You're being daft.

The very definition of competition means you have a competitor. Apple is using a technology that these companies already have installed. The stores don't YET have a system with which to compete.
It isn't word play. They have nothing and turned off the system they have so Apple can't use it.

[FLPanhandle]

13. A group of businesses colluding to stop something isn't "free market competition"

Unless the definition has changed to "whatever mega companies want to do is now free market"

[Action_Patrol]

15. That doesn't mean what you think it means.

[Erich Bloodaxe BSN]

2. I am going to take a wild guess that these large retailers

are not going to lower prices to consumers to match the savings they get on not having credit card fees to pay.

Basically, this is a way to put an end to consumer credit, and return us to a state in which you can only pay with money you either have with you, or have in a bank account.

[Xithras]

7. Not exactly

They DO want you tied to their store cards though (store cards have low to nonexistent fees for the retailers). CurrentC allows different payment sources, so you can choose whether the money comes out of your checking account, from attached giftcards, or from store cards that the retailer chooses to support (so Walmart will let you use a Walmart credit card). MCX has stated that additional payment options will be added as well, and that may include the ability to tie in Paypal or third party credit cards, but they aren't supported yet...and will probably only be supported if the buyer agrees to pay a higher fee to cover the credit card cost.

[canoeist52]

3. Cash is looking better with each new tech. development.

The security feature of cash alone makes it far more attractive. We did it before - we can do it again.

[arcane1]

4. Exactly!

[littlewolf]

5. yep. no worries about security breaches.

really big items are bank loans (cars, house).
everything else I try to use cash. if I don't have it
I wait.

[JustAnotherGen]

26. We are doing this more and more

I refused to install the ISIS App and pissed off a friend of mine that launched it at our wireless company.


Said friend doesn't see the on average $250K daily in fraudulent shipments as a result of brute force info attacks and social engineering to accounts that I see- after our 300 fraud person team 'misses' it the night before.

The final nail in the coffin with us was the Home Depot breech announcement a few weeks ago. We have gutted and renovate a kitchen/family room and 2.5 baths since October 21st of last year. That's been an a lot of times we've swiped cards with them.

New AMEX, new debit cards, and new MC.

So no cards unless absolutely critical let alone 'apps'.

[Xithras]

6. The real problem...

...is that retailers are getting tired of dealing with the Silicon Valley's utter inability to design a common, effective payment system. Paypal, ApplePay, Google Wallet, Softcard, Amazon Payments, and about half a dozen startups are now competing for space and support on POS terminals. Retailers, on the other hand, have been saying for MANY years that they simply want one technology that works for everyone, so they can keep things (and costs) as low as possible. They thought they had a solution with Paypal, but the decline of Ebay's soon to be spun-off payment system left many retailers holding the bag and swallowing millions of dollars in losses over wasted implementation costs. Home Depot, as one example, spent millions implementing and deploying Paypal support to all of its retail locations, but actual sales using the system have been abysmal, and they supposedly have not even recovered the original implementation costs yet. The retailers are getting burned, and are no longer interested in supporting fad technologies.

What many of the tech companies have utterly failed to realize is that "the customer is always right", and the customer, in this case, is the RETAILERS, and not the people who are buying and using their mobile phones or downloading their apps. You can design the best consumer payment system in the world, but if the retailers won't spend the money to implement it (and widescale POS upgrades in retail chains can cost tens of millions of dollars...or more, in the biggest retailers), then the tech isn't going anywhere. The stores have been demanding "universal, cheap, and fast", and Silicon Valley has responded by fragmenting further and demanding that the retailers support ever more complicated payment systems and expensive hardware. They wanted the ability to integrate payments with their own apps, and were utterly ignored by the tech companies. They wanted the ability to tie payments into their customer loyalty programs and to link in payments via gift cards or store branded credit cards (which pass along lower...or no...fees to the retailer), and the tech companies weren't interested.

MCX launched the CurrentC project (backed by a huge list of retailers) because the retailers are tired of waiting for the techies to get their act together and offer a product that fit their demands. What the Silicon Valley inventors failed to realize is that multi-billion dollar corporations aren't retail consumers, and aren't going to patiently wait around while the techies try to figure out how to put an effective system together. They aren't going to implement a dozen iterations of various fad technologies while the Valley tried to figure out which one to standardize on. The retailers, with their deep pockets and total control of the POS terminals, have simply decided to cut the techies out of the loop and come up with their own solution. It's hard to fault the retailers for that.

[Sen. Walter Sobchak]

21. CurrentC is dead on arrival too,

Seeing as the only credit cards it will support are store issued ones. Something nobody under the age of sixty has. And people are naturally reluctant to give access to their checking account to anyone.

In any event, this is all stupid. The barriers to entry are too high (for all concerned) and the need is too small for all these mobile payment schemes.

[Xithras]

23. That's more marketing than anything.

CurrentC will probably end up being marketed to consumers as a free, universal app based debit card solution. On top of that, many retailers may deploy it with an initial discount package in order to drive its adoption. Because the credit card companies charge several percent in fees, the retailers can potentially offer an across the board 3%-5% discount to CurrentC customers, and the retailers will walk away with the same profit margins they have right now. Doing that will drive many consumers to the service without imposing any costs on the retailers, and promises increased profits over the longer term when adoption peaks and the discounts are phased out.

On top of that, WalMart is getting into banking. Because WalMart is one of the major investors in CurrentC, you can bet that they'll make it a central part of their adoption plan as they market their low cost bank to the poor.

But, above all, CurrentC's biggest advantage is going to be choice...or lack thereof. When you walk into their member stores (a list that currently includes everyone from Target, Sears, and Walmart to Exxon, Dunkin Donuts, Hobby Lobby, Kohls, Old Navy, Wendys, and a shit ton of other major retailers) and CurrentC is the ONLY mobile payment method they're accepting, you'll either use it, or you'll stick with your old and insecure cards. While CurrentC may not be as refined as either Apple Pay or Google Wallet, it's a huge step up from old magnetic swipe cards. There have been enough major data breaches lately that the security improvements it promises may be enough to drive its adoption all by itself.

[Sen. Walter Sobchak]

24. Consumers fear overdrafts more than credit card security breaches

And if the goal is reaching out to the poor... with a service based primarily on checking accounts... you're in for the world of pain known as ChexSystems. A lot of the "unbanked" just plain can't get a checking account. And if Wal-Mart goes down that road they will quickly learn what that is. It will also run into the issue of SSN's and drivers licenses. Two things the unbanked might also be lacking.

And it doesn't really matter if this is the only form of mobile payment they will support, because nobody really wants this. I used to work for a major retailer (who tried to hire me back earlier this year) and their market research across all demographics found consumer enthusiasm for mobile payments PEAKED at indifference. The most positive impression held by any demographic group was indifference, most had a negative one.



The only people who want mobile payments are douchebags who want to conspicuously whip-out their iCock in line at Starbucks.

[KamaAina]

22. I don't see why I can't just use the Clipper card I use on transit

https://www.clippercard.com/ClipperWeb/whatsTranslink.do

A new Adult Clipper card will cost $3. Clipper will waive the $3 fee if you purchase your card online and sign up for Autoload at the same time. If you purchase a card at a Muni Metro or Golden Gate Ferry ticket machine, you will need to load a minimum amount of value to your new card. At other locations and on clippercard.com, there is no required minimum for new cards, but your transit agency may require a minimum balance to ride. To learn how to get a Senior, Youth or RTC Clipper card, click here.

Clipper® is the all-in-one transit card that keeps track of any passes,discount tickets, ride books and cash value that you load onto it, while applying all applicable fares, discounts and transfer rules. This lets you customize your card for your own transit needs. You can also use Clipper to pay for parking in a limited number of locations.

The Clipper card can hold multiple passes, ride books or tickets (which are specific to the transit system being used), as well as up to $300 in cash value at one time and up to $250 in parking cash value. Cash value on your Clipper card can be used to ride any participating transit system.

You can add value (in the form of both passes and cash value) to your card as you go, or for added convenience, you can set up your card to automatically reload whenever your pass expires or your cash balance falls below $10 or your parking cash balance falls below $40.

You just tag the card to a device on the bus or in the light rail or BART stations. It verifies the card, either recognizes a pass or deducts the fare, beeps, and you're on your way.

[FLPanhandle]

9. If I'm running a business, I wouldn't limit how my customers want to pay me.

Then again, my last name isn't Walton.

[SheilaT]

28. If you own a small business you can go quite crazy

dealing with how so many different credit cards have different standards about how much of a fee they will ding from you. And there are a very many different "rewards" cards, all of which ding differing fees.

[Travis_0004]

32. Limiting options isnt always bad for business.

Im assuming most consumers are more loyal to Lowes, Target or a store than they are apple ID.

I doubt any consumers use apple ID as their only form of payment. And if its not an option will have another form of payment.

[DirkGently]

10. Wow that sounds clunky & unsafe. Good luck, Walmart.

Will Anyone Want CurrentC? Probably Not

CurrentC is now being tested at some retail locations in Minnesota. Before CurrentC can rolled out, point of sale systems at retailers need to be modified, which can take time and explains the early 2015 launch date cited in the internal Rite Aid memo obtained by SlashGear.

CurrentC doesn’t rely on new technology like NFC or Bluetooth LE, so it will likely be compatible with older iPhones and Androids, unlike the iPhone 6 and 6 Plus-only Apple Pay. That could give it some broad appeal. MCX will also tout the automatic discount and loyalty programs that could appeal to bargain hunters.

The problem with the CurrentC system, as John Gruber points out, is that it’s based more around solving the retailers’ credit card fee problems than the consumers’ payment friction problems. Users have to open their phone, open CurrentC, open the scanner, scan the code from the cashier, and wait for the transaction to be confirmed. That may present more friction than simply paying with a credit card, and it’s certainly harder than a quick Touch ID verification and tap of Apple Pay.

I assume we'll end up with some kind of universal mobile wallet situation at some point. But I'm having trouble seeing people taking the time to get a special code, open an app, photograph the code with their phone, and wait to see if it works, just to save the *retailer* credit card fees. How is that easier than sliding / waving a card or handing over cash?

Not to mention giving all those retailers direct ACH access to their bank accounts. Wouldn't a breach of an ACH-based system mean the hackers could actually draw money directly out of the account? Bit scarier than fraudulent cc charges.

I don't know if Apple Pay is going to work either, but an NFC or Bluetooth system utilizing a thumbprint seems both easier and more secure. Either way, proactively disabling existing equipment so it won't work with Apple Pay to force people to use a clunkier system designed solely to save Walmart and Best Buy's credit card fees just seems spiteful and manipulative.

Hope they eat dirt on this.

[brooklynite]

17. Here's what's really happening...

Retailers have installed wireless payment terminals which can be used by any smart chip equipped device (including credit and debit cards). Apple has introduced a smart chip in it's iPhone 6 units and has established Apple Pay as a backbone, through which they would process payments for and collect fees from, retailers. The banks and retailers don't want Apple to corner the market because of the popularity of the phone and the quality of the Apple Pay system so they've shut down the terminals to ALL users, while they try to come up with a different system that they can control.

[JCMach1]

18. In this case, good... I really don't want Apple controlling payments with more of their

Apple proprietary ecosystem...

[FLPanhandle]

19. You do realize that Android phones have NFC capability too

And have apps to do the same thing?

The only reason the stores are afraid is once Apple joins Android, then consumers will want it and demand it.

[JCMach1]

33. Seems like that's not going to happen anyway since the payment universe is set to remain fragmented.

[Kablooie]

20. Japan has had a secure system like Apple Pay since 2004.

Most of Europe has had it for years too.
America is the only country that relies on cards with 1960 magnetic strips which are easily duplicated.

You may hate that Apple is spearheading this but it's needed with all the credit card breaches recently.
Google has their version, Google Wallet but it didn't take off but Apple Pay terminals can handle Google Wallet transactions as well so it doesn't have to be an Apple monopoly.

Any company that can make NFC payment systems standard will be doing a service for consumers by decreasing the fraud from stolen personal and credit card information.

America is usually the last to adopt new technologies even though we often invent them first.
If Apple Pay fails it will be a setback for all of us.

[pampango]

30. "Most of Europe has had it for years too. America is usually the last to adopt new technologies even

though we often invent them first." And our internet speeds are snail-like compared to Europe and Japan.

Nice post. It kind of makes you want to bang your head against a wall.

[ChiciB1]

27. I Heard Something Over The Week-End That The New Apple 6

It was all about phone costs, not owning your phone and mores fees from Apple. Obviously I wasn't listen closely because I have an older phone and believe it or now, don't have much on my phone by way of apps, etc. Don't use it for much other than calling. I KNOW... way behind, but I don't travel much and care for a relative so am home a lot. I'm on my daughter's account an pay her instead of even having an account. I'm so not with the times and know some think I'm nuts.

Perhaps I should just check out Apple website, is that the best suggestion. Is this to stop people from hacking into accounts too?

[SheilaT]

29. Cash is almost always accepted everywhere.

I generally pay cash for purchases, and if my money were ever turned down, I'd never shop there again. In the past I've been chastised here on DU for even suggesting cash, with other posters assuring me that carrying ten or twenty bucks in cash, let alone more, makes a person highly vulnerable to robbery. As if the credit cards in a wallet won't give the thief a far greater opportunity to steal.

Given how many credit card breaches there have been in recent years, I find it hard to believe that someone won't find a way soon enough to hack into the paying by phone system.