Commentary

CurrentC Squares Off Against Apple Pay

Although the highly self-vaunted Apple Pay is exhibiting an envious rollout on the new iPhone 6 devices — more than one million credit cards were activated within 72 hours of its debut, CEO Tim Cook crowed during an onstage interview at the WSJD Live Global Technology Conference Monday evening — there’s a snag. Some very big retailers — chains such as Walmart, Target, Publix and Best Buy that process more than $1 trillion in annual sales in toto — aren’t accepting it. Rite Aid and CVS pharmacies did at first, but suddenly didn’t.

The New York Times’ Mike Isaac tells us precisely why: The more than 50 companies who make up the Merchant Customer Exchange or MCX, which is working on a competing payment system called CurrentC, “are not supposed to accept competing mobile payments products like Apple Pay, according to multiple retailers involved with MCX, who spoke on the condition of anonymity. If these retailers break their contracts, they will face steep fines for doing so, these people said.”

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“Rite Aid flipped the switch without warning Friday midday, and CVS followed suit late Friday night, according to a payment industry firm that was alerted at the time," reports CNNMoney’s Jose Pagliery. On Monday, “representatives at both companies said they are currently ‘evaluating mobile payment options.’”

“Rite Aid and CVS are part of the MCX consortium,” writes Forbes’ contributor Amit Chowdhry, reporting that CurrentC has been available through Apple’s App Store “in invite-only mode.” It appears to be downloadable there by anyone this morning but 2,149 reviews —  granted, by presumed Apple loyalists — add up to a one-star rating (on a five-star scale) with comments such as “I wish I could give less stars.” 

Official “regional and national rollouts” for the app are scheduled for 2015, according to an MCX press release dated Sept. 3.

“CurrentC Is The Big Retailers’ Clunky Attempt To Kill Apple Pay And Credit Card Fees,” reads the hed on Josh Constine’s piece in TechCrunch that relies on research from Stanford student Andrew Aude about MCX’s plan.

“The idea behind MCX was that if enough retailers teamed up, they could convince consumers to adopt their mobile payment system that would let retailers avoid paying credit card fees in the 2% to 3% range by processing payments through Automatic Clearing House transactions through bank accounts that have much smaller fees,” Constine explains.

“If MCX’s app caught on, partner retailers could escape tons of fees, which could directly increase their profits. Alternatively, they could use the leverage of MCX and the threat of sidestepping the processing fees to negotiate lower fees with the credit card companies.”

Apple CEO Cook told the Wall Street Journal’s editor-in-chief, Gerald Baker, in their Q&A session, that Rite Aid’s and CVS’ disabling of the Apple Pay functionality “amounted to a skirmish,” Daisuke Wakabayashi reports, and he “expressed confidence that Apple Pay will thrive in the long run.”

“You are only relevant as a retailer or merchant if your customers love you,” he said. “It’s the first and only mobile payment system that’s easy, private and secure.”

“Walmart commented on the matter yesterday, saying MCX has consumers' best interests in mind in denying Apple Pay and other mobile payments options,” Mikey Campbell reports in Apple Insider.

“The consortium is looking to bypass credit card network fees by linking directly to customers' bank accounts, but the security implications of such a system are troubling at best,” Campbell continues. “In addition to avoiding swipe fees, CurrentC enables purchase tracking and processing for loyalty programs, coupons and special offers to further boost MCX merchant sales.”

Apple Pay does not share any consumer data with the merchant, on the other hand.

“MCX is studying how to make sure all of the things that a customer wants to do in a store can be facilitated in a conscious way,” Steve Mott, owner of payments industry consulting firm BetterBuyDesign tells the NYT’s Isaac.

But, Isaac concludes, “many say they believe that if any company is able to widely influence consumer behavior, it’s Apple. And if that is the case, MCX may have picked the wrong mobile wallet to back.”

Meanwhile, the Apple Pay and Current C situation has become such a hot topic on Reddit that it has added a sidebar filter to allow viewers to block posts about the “very important” discussion “since a sizable chunk of our community doesn't use Apple Pay.”

They might have said the same about iTunes once upon 13 years ago.

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