The Death of Apple Pay?

October 27, 2014 0 Comments

I didn’t think that I would be writing about this so soon after the release of Apple Pay, but this is either a sign that the new mobile payment system is too successful or not successful enough. On my previous blog entry, I wrote about the functionality of Apple Pay, and how it seemed to work seamlessly at local retailers, except for Rite Aid for some odd reason. Apple Pay seemed to have worked the first couple of days, and then the payment system seemed to have stopped processing transactions. For what it seemed to be trouble with the retailer due to an NFC issue out turned out to be calculated business decision on Rite Aid’s part. As it turns out, Rite Aid is no longer supporting Apple Pay due to its involvement with a competing mobile payment system.

Internal documents leaked by an unknown source explains to employees why the pharmacy isn’t accepting Apple Pay at this time, and also explains why Rite Aid will not be able to accept Apple Pay going forward.

From SlashGear:

Please note that we do not accept Apple Pay at this time. However we are currently working with a group of large retailers to develop a mobile wallet that allows for mobile payments attached to credit cards and bank accounts directly from a smart phone. We expect to have this feature available in the first half of 2015.

If customers attempt to pay for a transaction with Apple Pay, a message will prompt both customer and cashier for a different form of payment. Please instruct cashiers to apologize to the customer and explain that we do not currently accept Apple Pay, but will have our own mobile wallet next year.

While the document makes no mention of the alternate payment system, we can probably already guess what the competing alternative could be. Long before Apple Pay was even considered an afterthought, big retail companies were planning on developing a payment system that could eliminate their 2-3% transaction fees they were charged when consumers pay with a credit/debit card. A company called Merchant Consumer Exchange (MCX) came up with the idea of a mobile payment system that processes the transaction with your debit/credit line, without involving the middle man such as Visa, Mastercard and American Express. This mobile payment system is known as CurrentC (Get it? Currency with a ‘T’ and without the ‘Y?’ It’ll never catch on…), and it is already in the app store available for download.

Just so you know, people are not happy about this. The network isn’t even available for use and already this app has a 1 star rating, with tons of horrible reviews.


Yeah, I was using my hotspot to write this…

To be fair, I’ve never been a person to accept a critical/favorable review of something on iTunes that has yet to be released. To be extremely fair, there 5 reviews with 5 star ratings, but those reviews could be from employees of MCX for all I know. Interestingly enough, the comment above has it right. This is just another attempt to stifle the competition, at the same time, part of a campaign to eliminate credit card transaction fees. This was never really a problem when Google Wallet was on the market. Maybe because no one really cared about Google Wallet (I’m not even sure users with Google phones cared about Google Wallet).

A new mobile payment system gains widespread support and there are instant attempts to squash it from large Corporations. Not only did Rite Aid eliminate their NFC system, but CVS/Pharmacy, Walmart, 7Eleven, Dunkin Dounuts, Target, just to name a few. And how convenient for me, the only places where I can use Apple Pay are the places I don’t like shopping at:

Apple Pay Stores:

Apple-Pay-Locations1-600x425CurrentC Stores:

currentc-retailers-logoAlthough, we should all keep in mind that not all stores are pulling NFC support for Apple Pay. Just a good portion of large retailers, and enough to incentivize more to hop on board, considering that retailers have to pay more than $1 Trillion in annual transaction fees. People should also keep in mind that as long as a retailer has the ability to process NFC transactions, you can still use Apple Pay, unless they have pulled support for it as well. In which case, I will be shopping at my local grocery store from now on to use Apple Pay.

Nail In The Coffin For Apple Pay?

So is this the end for Apple Pay? I don’t really think so. Apple Pay is already gaining momentum and it seems to be really popular among consumers. A better question would be who is going to want to use CurrentC? What is so great about this phone-payment system that large corporate retailers want to force individuals to either use it, or use nothing at all?

The Good:

There are some interesting aspects to CurrentC, such as being able to sync loyalty, discount and gift cards to your CurrentC account. This can eliminate the hassle of having to look for all of these things at the register. If you also have a bank that is a partner with the retailer, special promotions could be synced to your CurrentC account. There is also a map feature that can give you the location of participating retailers that accepts CurrentC. I’m sure Apple Pay proponents would have loved this feature on their passbook, so they would know what retailers NOT to patronize.

Because CurrentC doesn’t utilize NFC, it can be used at more retailers and it could also be used across platforms, not just on Apple. This means less advanced phones will be able to use this service.

The Bad:

So far, I have a feeling that the bad might outweigh the good in terms of privacy. The general problem with CurrentC is that it is less secure than Apple Pay. In order to use CurrentC, it requires direct access to your checking account. The app also collects other information from the user as well, such as your location, your text and phone call history, your health information, and your transaction data for marketing purposes. And the app notes to the user that it might share your information with your device market, app store or developers. I’m not really sure anyone will be on broad with allowing their phone to spy on them just for discounts and promotional offers.

Another bad thing about the app is the functionality. To purchase something using Apple Pay, I don’t even need to unlock my phone screen. All I need to do is hold the phone up to the NFC reader, allow the phone to reconignze that the NFC reader is active, choose which card I want to use and pay using the Touch ID. The entire process takes only 5 seconds, much faster than swiping your credit card the old fashion way. With CurrentC, I need to unlock my phone screen, find the app, open the app, locate the QR bar code, scan the bar code and wait for the transaction to be authorized. This creates more friction with the users, and sounds like it takes more time to use than paying with an actual credit card. This takes even more steps than Google Wallet, and even Google Wallet cannot work unless the phone screen is unlocked.

Final Thoughts

Seriously, I don’t see why there is anyone who would want to use this. The system could develop some appeal to bargain hunters who don’t have high-end advanced phones, such as the Samsung Galaxy, The Note, Apple 6/6 Plus, and the Google Nexus. However, this gimmick seems more like an attempt to save a corporation’s bottom line rather than to save consumers time. Despite this, I am a firm believer in the ability of a business to do what’s in its power to reduce cost and protect the bottom line, which is why you won’t seem me writing angry emails to CVS or Rite Aid. However, I do believe that the best way for anyone to become rich, in a Capitalist economic system, is to find out what people want and give it to them, and the people have decided that they want Apple Pay. So these barriers to entry won’t really hurt anyone, but the businesses setting up these barriers.

And as I said earlier, I wasn’t sure if this was a sign that Apple Pay is too successful or not successful enough, but now I think I have found my answer. Apple Pay performed exactly as promised. It improved overall consumer experience in terms of security and convenience. It works so well, retailers are actually disabling their NFC system just so consumers won’t be able to use Apple Pay, rather than configuring it so that Apple Pay will no longer support it. Think about it. These terminals have been installed for years with barely anyone using them, other than for Credit/Debit Card blinks. Apple Pay works so well, retailers would rather block everyone from using NFC rather than allow an Apple Pay transaction to go through. Clearly, Apple as created a monster, and its going to be very difficult for anything MCX has created to bring it down.

At some point, people will end up shopping at these anti-Apple Pay retailers, so this populist anger won’t last, but I believe this will hurt these retailers in the long run. Without a large supportive consumer base, CurrentC doesn’t really stand a chance. Not unless it can offer some huge discounts so people can willingly use the app. This might sound tempting, but is losing money on the Cost of Goods and Services (COGS) really worth avoiding a messily 2% transaction fee from VISA and AMEX? We will just have to wait and see what happens when CurrentC becomes functional in mid-2015. In the meantime, we just won’t be using Apple Pay at some of our favorite retailers. However, If CurrentC doesn’t offer something good, it is likely to fade away into obscurity while Apple Pay dominates the industry.


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