“Retail giants are likely to blink and support Apple’s new mobile wallet, speculates RBC Capital in a research report,” Reinhardt Krause reports for Investor’s Business Daily. “While Apple’s strength is its 800 million or so global iTunes users with accounts linked to credit and debit cards, a retail consortium called MCX (Merchant Customer Exchange) has powerful backers, including Wal-Mart Stores, Best Buy and more than 60 other retailers. Under MCX’s rules, its members can’t accept competing mobile payment systems, as IBD reported in March. In a blog post Wednesday, MCX denied that it fines retailers who break their contracts.”
“The retailers, who process more than $1 trillion in traditional in-store payments annually, plan to launch their own digital wallet app, called CurrentC. Pharmacies CVS and Rite Aid have turned off checkout terminals compatible with technology Apple is using,” Krause reports. “RBC analyst Daniel Perlin, in his report, said that while MCX now has more retail clout, the consortium will ultimately work with Apple.”
Krause reports, “‘Looking at 2013 sales from the top 100 U.S. retailers, we estimate that about 38% of sales are from retailers who are members of MCX, while 13% are from retailers accepting Apple Pay,’ wrote Perlin… ‘At the end of the day, we believe that retailers will accept whatever form of payment consumers want to use, as the retailer does not want to lose the sale.'”
Read more in the full article here.
[Thanks to MacDailyNews Reader “Giblet” for the heads up.]
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Unless retailers pay customers to use CurrentC, they will cave and accept Apple Pay, because no one will sign up for it.
That’s my take. CurrentC is cumbersome and insecure, while Apple Pay is the ultimate in both security and convenience (used mine for the first time today at a Dairy Queen and was wholly impressed with it).
I’d have to think that ultimately it’ll be the customers who will make a new payment scheme work. And any customer with two brain cells to rub together will choose Apple Pay over any other option if they can, and eventually that pressure will come to bear on these retailers.
What I find interesting is MCX’s claim that they don’t fine their members. If that’s true, why would these retailers turn off support for Apple Pay? Making it more difficult for your customers is just plain stupid, unless they’re being pressured or threatened by this consortium.
They do not fine the offending merchants. They charge higher fees to them. Simple.
They’re being a little dishonest. While there is no literal fine for leaving, there is a financial disincentive in that MCX is owned by its members. Any member that leaves will lose all the money they invested in it.
——RM
Many will. Almost two decades of internet use has trained a whole generation to trade privacy for convenience and discounts. It’s only been recently that privacy push back has occurred. My take is that it will come down to the package of discounts and services provided as member of their CurrenC incentive program. There is a whole culture of people that thrive on coupons and discounts, and aggressively manage their shopping to take advantage. Some do it because they need to make ends meet, and some do it seeing it as a game. What I’m worried about is that MCX will do its best to downplay the security risks and invasiveness of the data mining to a largely ignorant consumers. We’re in the middle of this, but go ask your grandma about MCX or CurrenC and watch her eyes glaze. She’ll just go down to the local CVS for her meds, get sold on the great membership perqs, and hand over the info they want to sign up. Hopefully her bank account won’t get cleaned out.
The problem for them is that instead of being easier than grabbing your card NFC or otherwise their solution is considerably more difficult and iBeacons offers a far greater potential for savings and promotions for retailers who exploit it.
Of course it
Of course CurrentC is a ridiculous anti-solution. I think you’ve missed my point. You know what’s going on. I know what’s going on. My point is that their will many less educated and aware of the pitfalls of CurrentC. Many will be lured in with the promise of savings and special services. My comment above was directed at the original post that predicted that no one would use CurrentC. I say there is a sucker born every day.
Some will be lured in. And it will look like a big number, unless you measure it as a percentage of shoppers. And then it will be tiny.
See, CurrentC has a triple-whammy against it.
First, there’s the privacy and security concerns. That will turn off the technically savvy.
Second, having to tie it to a checking account. Most people these days don’t use their checking accounts as cash wallets. They keep enough in there to pay the bills, if even that much. Having to make sure you have enough money in your checking account before you head out to shop is like a step backward to the days before credit cards.
Lastly, and the biggest one, there’s the difficulty of using the system. After the novelty wears off, people won’t want to go through the hassle anymore. For this reason, I expect to see a spike in usage right after the rollout (which idiot analysts will tout as proof of CurrentC’s success), followed by a large drop-off.
——RM
But CurrentC does not offer convenience. It is less convenient that just using the debit cards that people already carry. And CurrentC requires current funds – direct debit payment. So it completely strikes out on those who have a reason to use credit cards – purchase protection, fraud protection, insufficient funds in the checking account, etc.
On top of that CurrentC is not secure. The *only* reason a small percentage of people might sign up for CurrentC is if the companies give them big incentives. But that would go against the primary reason for implementing CurrentC – increased profits from reduced transaction costs. If the companies simply shift the transaction cost from paying the credit card fees to bribing their customers to use CurrentC, then what is the point?
The banks hold the key. The cost of direct pay from a bank is not free. Each transaction is charged for. Right now it is cheaper for me to use a credit card because in the end it is only one bank transaction per month as opposed to upwards of a hundred using direct debit which would cost a fair bit per month. Now the credit card transaction is a charge that allows me to collect credit card kickback. There is no way that CurrentC will be cheaper. (for some accounts there is a 76 cent fee for every transaction over a base number. That is equivalent to a 7.6% fee for a $10 debit at Walmart etc ) AND WHO ARE THE BANKS SUPPORTING !!
They’re ACH transactions. Typically there is no charge to the account from which the money is withdrawn. That’s about the only good thing. It’s crazy to give them direct access to your bank account. They can take money at any time. If there’s a mistake the money is not returned until your dispute is settled. That could take weeks. It’s a terrible idea.
Of the 2 important drivers for retailers of using MCX process – not having to pay the CC transaction fees, and getting customer data – I believe the transaction fees is the more important (estimated at $42 billion/year; this supports the existence of MC, Visa and Amex activities). But … even if they get their way and “many” customers use the MCX process, does anyone believe that retailers will reduce the prices of their goods by 1.5-3% for “all” users??? Of course not!! MCX users will be the chumps, as they give away their info, and allow the retailer to “not” pay the 1.5-3% transaction fee.
Greedy retailers; who cannot/will not see the big picture.
User info is worth $300 per person per year. That’s $15,000 in sales of goods. This asset is worth way more than credit card fees.
Where does that $300 per year figure come from? Facebook has a billion users. They don’t generate $300B in revenue.
Facebook is not a retail chain.
The $300 figure is what several analysts estimate is the annual revenue retailers can make from each “active wallet”. That number does NOT represent profit from their regular business; it is the advertising potential for every single customer, based on their purchasing history and personal info.
Apple pay eliminates that revenue by completely anonymizing the customer. It is almost like paying with cash.
For retail, tracking what you buy and targeting products to customers based on what you buy – no one ever mentioned Facebook, which cannot have that detailed metric, so can’t charge for the quality advertising retail can. Facebook can only charge for advertising like other media outlets.
Example: Safeway can go to Kraft and say, customer X buys 50 boxes of Kraft Macaroni and Cheese, per month. We will guarantee they will see the next coupon for Kraft Macaroni and Cheddar Cheese, the next time they shop. Also we will recommend to them your new rice product. Safeway can corral guaranteed sales, where as Facebook can’t. However Facebook is a lot better to advertisers than news paper flyers, mailers, and TV. Better than Facebook? Google.
I see. So where does the $300 figure come from? Is Amazon a retailer?
The $300 came from a report, It’s in MDN’s blog, you have to go back and check. But it’s going around.
And there wil be repercussions for bank fees on the consumer too should their income from cards be compromised so consumer beware this could be a double whammy.
I have a idea. If Walmart, Best Buy, Target, CVS et al. do not like paying credit card fees why don’t they simply quit accepting credit cards. There’s the answer. I wonder how long they would stay in business.
Way to go MCX, backstabbing your supporters.
LOL
Yup, they have been “Plays for sure.”
Those retailers can’t budge because they’re under contract and would have to pay a hefty penalty for using any payment system other than MCX’s CurrentC. That’s how binding contracts are unless there was an escape clause written to get out of it for some unforeseen reason. I’ll bet there are plenty of individual retailers who’d like to escape and use Apple Pay.
Check out the mcx.com website listing all of their “partners”. When go to Apple’s Apple Pay page and look at their list of “partners” … there’s one commonality between the two … Meijer. They’re on both site’s list, and I can confirm that Meijer does in fact accept Apple Pay.
I can only wonder if Meijer was one of the early sign ups for MCX, and is now out of their contract with them.
I can only hope that’s the case, and they don’t have to pull Apple Pay support since I shop there a lot!
Something I’ve noticed with most of the other MCX supporters – over this past year most of them have replaced their payment terminals with the big 7″ touch screen Verifone terminals. Meijer has not yet updated their terminals, they seem to be playing outside of the MCX standards, hopefully that means they’ve given up on MCX / CurrentC.
I hope you’re right. I shop at Meijer all the time too.
They can use the GT Advanced example: go bankrupt (after giving healthy projections for the next quarter), then complain to the press that the burdensome contract with MCX was the reason.
Apple & Google can just decline to publish the CurrentC app on their app stores. Then what?
MCX Petition
https://petitions.whitehouse.gov/petition/order-doj-investigation-merchant-commerce-exchange-facilitating-anti-competitive-collusion-among/Ms9VCP9y
Thanks for the link. I just signed it!
HEY MDN – how about a story about this petition to advertise it! You alone could probably get all 100,000 signatures needed for a response.
Signed it, this is the best way to get them to put back Apple Pay.
Thanks for the link. I just signed up and hope more ppl will signup too to combat the cartels!!
Migration to Walgreens from CVS is complete. Bye Bye, CVS. Not only does Walgreens accept Apple Pay, they are promoting it on their NFC terminals! We were heavy CVS customers — multiple prescriptions, over the counter stuff, etc. No more. The switch could not have been easier. If enough of us do this, then CVS will wise up. Of course, it may be too late . . . .
I just moved all of our prescriptions over from Rite-Aid and CVS to Walgreens due the the ApplePay issue. I also called Walgreens customer service and told them that I did so and why I did and to pass this info on to upper management. I also emailed CVS and Rite-Aid that I switched my business from them to Walgreens due to their lack of support for ApplePay.
This public outcry could result in tons of good, free publicity for Apple Pay. Internet security experts will weigh in on the issue and emphasize the relative security, privacy, and convenience afforded by Apple Pay’s mature fingerprint authentication technology. It looks like MCX is already altering some of its protocols and rules? Twenty million NEW iPhone 6 users are intrigued in using Apple Pay and (hopefully) will go out of their way to not only use it, but put pressure on all retailers and restaurants to at least allow it.
This isn’t Apple’s fight. This is MCX taking on the three major credit card companies. Apple is a white knight to Master Card, Visa and American Express.
MCX doesn’t stand a chance in this fight.
Does anyone shop at Best Buy? I went in one recently and there were more Samsung peddlers than any combination of other humans in that store.
Payola….not the correct term, but I forget what they call it in retail.
Spiffs?
Tonight I saw a MasterCard-Apple Pay ad for a Major League Baseball sweepstakes you are auto entered into when you use Apple Pay with your registered MasterCard. The publicity is still just getting started. 😛
People: not everyone has an iPhone 6/Plus. Let the Fandroids have their stupid, inconvenient, insecure CurrentC. If MCX retailers don’t want iPhone 6/Plus shoppers- it’s their choice (and ours not to shop there)…
Who in the world can avoid Wal-Mart? I could never pass one without stopping in for something.
We don’t have one in Manhattan. I’ve never been to a Walmart store yet. 23 years in America.
I live in the suburbs of New Jersey and have never set foot in a Walmart. Will very likely never set foot in a Walmart. All they want to do is squeeze every dime they can from every shopper that walks through their doors and pass as much of it as they legally can to the Walton family, six members of which currently hold more wealth than the bottom 30% of Americans. They are intent on destroying the fabric of America by hiring as many part time employees as they can get away with and offering them as little as they possibly can in compensation. What ever happened to corporate responsibility in the United States? Sam’s Club is owned by them as well. Steer clear.
I’m pretty good at avoiding Walmart and there is a Walmart close-by. I find that the store is too large for my shopping. The few time I have gone there I find it hard to find what I want.
I didn’t think CurrentC had anything to do with Android devices, but correct me if I am wrong. I thought the alternative to Apple Pay is Google Wallet.
CurrentC retailers can choose to remain stubborn. It will just cost them in the long run. And if they support Apple pay in the future, unless out of necessity, would you really go back to shopping there?