Why some retailers are afraid of Apple Pay

“Apple Pay is giving more power to credit card companies. Some big retailers hate this,” Jose Pagliery reports for CNNMoney. “When you swipe your card at stores, retailers have to pay credit card companies between 1.5% and 3% of every transaction. With CurrentC, retailers might get away with paying a tenth as much.”

“These retailers are also rejecting Apple Pay out of fear that Apple’s newer, safer payment system will let banks charge stores even more money for every swipe, according to Cherian Abraham, a mobile payment expert with Experian,” Pagliery reports. “Then there’s customer data. Shops want it. Apple Pay doesn’t give it to them.”

“With Apple Pay, store registers never get your credit card number — only an anonymous payment token. This chokes off the number one way retailers get customer data for tracking purchases and directly marketing to you afterward,” Pagliery reports. “Meanwhile, CurrentC is at its core a coupon-and-rewards app. That gives companies lots of detailed information about what you buy and who you are.”

Read more in the full article here.

MacDailyNews Take: As we’ve already written multiple times:

Unlike CurrentC, Apple doesn’t save your transaction information. With Apple Pay, your payments are private. Apple Pay doesn’t store the details of your transactions so they can’t be tied back to you. That is what Walmart, CVS, Rite-Aid et al. hate about Apple Pay and why they currently won’t allow their customers to utilize Apple Pay.

Boycott non-cash payment systems from any company that willfully turns off NFC in an effort to block the vastly more secure, much more private, and far easier-to-use Apple Pay service.

Related articles:
Apple Pay support added by US Bank, Barclaycard, PNC, M&T Bank, and more – November 3, 2014
Apple Pay to fuel chatter, new products at Money 20/20 conference – November 3, 2014
Apple Pay vastly superior and much better positioned than MCX’s CurrentC – November 1, 2014
CurrentC, MCX retailers’ answer to Apple Pay, faces doom – October 31, 2014
Meijer first to break MCX ranks, keeps Apple Pay support at its 213 stores – October 30, 2014
Feeling the heat, MCX CurrentC consortium suggests possible future switch to NFC – October 30, 2014
Analyst: CurrentC retailers likely to blink and support Apple Pay – October 29, 2014
Why CurrentC will beat out Apple Pay in the end – October 29, 2014
How to punish Walmart, CVS, Rite Aid, and others who block Apple Pay – October 29, 2014
iPhone users and Android settlers raid reviews of CurrentC payments app – October 29, 2014
Retailer-backed MCX Apple Pay rival has already been hacked; testers’ email addresses stolen – October 29, 2014
Why Walmart, CVS and Rite-Aid really hate Apple Pay: They can’t track your buying habits – October 29, 2014
CurrentC retailers’ conundrum: MCX contract expressly bars Apple Pay acceptance – October 29, 2014
Retailers like CVS and Rite Aid that block Apple Pay are taking a big security risk – October 28, 2014
Apple Pay tussle with CVS, Rite Aid the first shot in mobile payments war – October 28, 2014
In one week, Apple Pay already No. 1; used more than all other mobile payment systems combined – October 28, 2014
Alibaba’s Jack Ma says open to working with Apple on Apple Pay – October 28, 2014
Tim Cook blasts CVS, Rite Aid over Apple Pay blockade: ‘You only are relevant if your customers love you’ – October 28, 2014
Seeking personal data, Walmart, Best Buy, and others won’t let shoppers enjoy Apple Pay privacy – October 27, 2014
Boycott CVS and Rite Aid – October 27, 2014
Bad business: CVS and Rite Aid antagonize their most well-heeled customers by blocking Apple Pay – October 27, 2014
CVS stores reportedly disabling NFC to shut down Apple Pay – October 25, 2014
iPhone users earn significantly more than those who settle for Android phones – October 8, 2014
Yet more proof that Android is for poor people – June 27, 2014
More proof that Android is for poor people – May 13, 2014
Apple’s iOS dominates in richer countries, Android in poorer regions – March 25, 2014
Twitter heat map shows iPhone use by the affluent, Android by the poor – June 20, 2013
iPhone users smarter, richer than Android phone users – August 16, 2011
Yankee Group: Apple iPhone owners shop more, buy more, remain more loyal vs. other device users – July 20, 2010


      1. I dunno, man. CurrentC seems unpleasant even for morons to want to use it. Sure, those folks don’t understand privacy (or don’t care), but linking the app to your checking account and scanning QR codes would be a major pain in the ass.

        I tell you one thing. People struggling to use CurrentC in a supermarket checkout line could cause riots. We already hate the people who still write checks for their groceries — imagine being stuck in line behind someone trying to keep his phone still to take a picture of a QR code.


    1. And unfortunately for MCX, most these users are also too stupid to set it up in the first place. They are the kind of people who have no understanding of the universe beyond typical human societal behavior.

  1. What WorstBuy, WelfareMart (Wally World) and the rest do not want to admit is that the customers that they most desperately want DO NOT WANT TO BE TRACKED and data mined for adverting and marketing. My data and preferences are none of your damned business.

    1. Walmart was already extremely trashy, and Best Buy was already quickly heading there, with all the dirty, matted-haired people standing stupidly around the Samsung tablets asking if it has a “wifi router thing built in”. Imagine the scum these stores will be left with now after this decision. Good luck turning a profit.

  2. This needs to be at the choice of the consumer. I’m fine with a retailer having my sales history so long as I’m opting to share it with them. So why can’t these companies simply have some kind of frequent shopper or loyalty card, and let me choose whether or not to swipe that when I make a purchase? Why does it have to be rolled into the actual payment?

    Best Buy, one of these idiot CurrentC advocates, already has a loyalty program, and you’re asked for your card or phone number on every single transaction as it is. Doubling that up with a clunky payment system that requires me to share my bank account info and social security number, and us highly insecure, in order to use it is just plain ridiculous.

  3. I don’t understand how a retailer or anyone can say they they cannot track purchases, they still ring up every item the customer brings to a register. Perhaps they cannot associate the sale to a specific customer.. but if they are using coupons or some other means, they can still get that data, which I think is highly over-rated for giving any of them a heads up on anything.. but that’s just me..

    1. That’s the point — they can’t tie specific purchases and buying trends to specific customers, geographic locations, etc. Coupons don’t help either, because it is not tied to a customer.

      What these retailers are completely missing is that a good loyalty/coupon program will get them as much information as they could ever desire. I don’t have a problem with such a program so long as it is optional, but I should be able to pay with the payment system of my choice, especially the most secure payment system on the market.

        1. Passbook keeps track of the transactions, so you have a record there. I imagine the banks will eventually update their statements, but even if they don’t the worst you’ll be faced with is reconciling your transactions with Passbook or another financial services app. It will be no worse than balancing your checkbook used to be.

          1. I’ve been using it a lot in the US and Canada, and it only shows the location of my last use in Passbook.

            In my (Wells Fargo) bank app, I can see detailed information… Subway, Chevron, Panera, etc… the date and amount. There’s a code in the transaction list that tells me that it was an Apple Pay versus physical card.

            The bank app could do a better job by allowing you to filter on the code and identify that the code=Apple Pay, but hopefully that will come soon.

            Putting that info in Passbook, from a marketing perspective, would be a bad idea. It’s better to obfuscate the amount from the user so the idea of money output is abstracted.

    1. I used mine the other day at a restaurant, with my Wells Fargo Check Card attached to it. It showed up on my statement the way any other Check Card purchase does, by listing the retailer, the date, the city and state, the card number (with most of the actual numbers X’d oit), the transaction ID #, and the MCC # (which I assume is the merchant ID number), and the amount.

      1. I just checked my AMEX account online – Apple Pay transactions show as –
        “Oct 21 AplPay MEIJER INC #6 $10.00 ”

        I also checked my Chase Visa account online –
        “10/22 Subway 00057182 $5.30”

        It appears that the Banks can decide whether the transaction is tagged as “AplPay” or not.

    2. I have Chase, used  Pay once so far at McDonalds.

      Never thought to look at the charge honestly..
      So opened up the Chase app and it shows all the detailed info like I paid normally. it’s been a few days, so it may have said mobile payment before.

      I would assume on everyones monthly statement it will show the details like it would if you used the actual credit card, but depending on the bank it may say “mobile payment” or something similar for a few days.

    1. That means that instead of them relying on and looking for payment data and fees to make their revenue the lazy way, they should get off their asses and start giving their customers quality, value and service, rather than shaft service.

      That’s why apple is head amd shoulders over a y company in the world – ti cares and gives a shit.

  4. As I noted in an earlier article, although the store never gets your actual credit card number, the Device Account Number that’s generated from your card and your iPhone is unique to that iPhone, but remains the same whenever you use it. This is what lets retailers process returns, for example. It’s the transaction authorization code itself that’s unique.

    So although it’s impossible for a hacker to use the DAN if the retailer is hacked, it seems fairly easy to link purchases and start building a profile: the old fashioned way, ask for your personal details when processing your order, maybe as part of a contest or discount. That’s then linked to the DAN, which remains the same until you get a new iPhone and a new DAN is generated.

      1. The DAN isn’t necessary to set up a returns/exchange transaction, true… you have the item in hand and the receipt, seems pretty cut and dry! But at least where I live, the stores always want to return the funds to the original account… or at least using same payment method e.g. they won’t give you cash back if you bought with a credit card.

        If they insist on returning it to the same “card”, then just the auth code/token wouldn’t be enough.

        But, Apple Pay returns have gone pretty smoothly so far or we’d have heard a ruckus in the news already, so whatever they need for refunds is obviously being satisfied.

    1. I don’t believe the merchant gets that information; that is kept between you and your bank. The merchant still gets a one-use token, which your bank receives as a credit to your account rather than a debit.

  5. The issued raised as to the fees the credit card companies charge is a legitimate one. I am certainly NOT advocating for CurrentC. But those fees mean we really are paying more when we buy things. If merchants are hurt, it usually means their customers will be hurt, too, even if they don’t know it. It would be nice if Apple – down the road – did a bit of negotiation to get fees lowered like it’s negotiated with the record labels and others.

    1. But merchants aren’t hurt. They’ve already raised their prices to compensate for credit card service fees. In most cases they don’t give you a discount for paying cash instead of using a card. If more people actually used CurrentC, would they drop their prices? Or would they simply pocket the difference as profit?

      Apple is just a transaction processor for the banks here, and they really have no relationship with merchants at all. Banks are paying Apple a small portion of their service fees. It’s worth it to the banks because it limits their exposure to fraud and security breaches. If anything, merchants should rush to adopt Apple Pay, and then argue that because of the reduced possibility of fraud banks should lower their service fees. But that won’t happen, because retailers are dependent on the ancillary revenue they get by selling your personal data. It’s all about their greed, not the good of their customers.

      1. Darkness, I don’t think you’re understanding this. Merchants are hurt each time their cost of doing business goes up. Credit card fees are big. So, yes, they raise their prices. Who pays those higher prices? Not the merchant. The customer. Some merchants become less competitive because of the fees. All fees are not created equal and all merchants don’t have access to similar rates.
        Actually, a number of merchants do give a discount for cash – now that it’s legal again.
        “Profit” is not a bad word. We want merchants to make a reasonable profit or they would be out of business. That means people are out of jobs.
        I fully agree that merchants should rush to support Apple Pay. But to ignore the fees that affect ALL of us, is to have blinders on.

        1. The fees affect everyone because the cost of goods goes up, but there are a lot of factors that affects the cost of goods. Want the stores you shop at to look nice? That costs more, so the cost of goods goes up. Want the convenience of paying with credit/debit/check? Costs go up. Want a discount on your groceries? Loyalty program costs you personal information. Want your merchant in a convenient location at a major intersection? More expensive real estate; costs go up.

          Merchant fees are a part of doing business. While every business has access to different fee structures based on their transactions, it is still built into the cost of goods/services. If you pay with cash, you’re just not getting the convenience of using a credit/debit card but you’re still paying for it.

        2. I’m not sure you understood my point Mr. Mercury Wells. 🙂

          I’m suggesting that merchants are pricing their goods with the credit card fees in mind, to pass on that expense to their customers. I’m not saying they should ignore the fees, I’m saying that those fees are a matter for the merchant and the bank to sort out. The customer shouldn’t be involved. If it was just about the fee, merchants could offer discounts equal to the fees for paying cash but they largely don’t.

          In theory banks charge the fees for providing a service. That service is twofold. It allows people without cash to buy the merchant’s product using a short term loan (for which the bank charges both the merchant and the customer) and they provide broad fraud protection that covers the customer and the merchant. It’s not like the merchant gets nothing for the fees they’re paying. That’s the reason merchants should use Apple Pay as a tool in their negotiations with the banks. Because it provides a real savings in the bank’s cost of doing business. Less fraud means the bank should charge the merchant less for that service.

          I agree that profit is not a bad word, and I want merchants to make money. I’d prefer that they not do so by double dipping and selling off my personal information and transaction data, but that’s just me.

          1. @Darkness .. agree with much of what you’re saying, although I’m going to take a bit of a more cynical view: just as the Merchants don’t generally offer cash discounts equal to what their CC % fees are, the Banks also have self-serving interests too…and I’m glad that you recognized that reducing Fraud is one way for them to improve their profits – – – and that’s where I see a rub in this: the potential for Apple Pay from the Bank’s side is that their fraud rate goes down while their %-fees stay the same, and it seems that they’re keeping “all” of it (except for Apple’s cut), with nothing being passed back to the Retailer for him to share in this fraud reduction benefit.

            And the Retailers already know that they’re getting hammered, because the new regulations that become effective October 2015 pretty much are set up to make them the fall guy for fraud costs if they stick with the magnetic stripe (Status Quo) and not upgrade to newer, more secure transaction hardware/technology.

            IMO, this is why WalMart (et al) were motivated to try to change the game by cutting out the Banks entirely. And to shift our paradigms, maybe they are correct: we may very well be very much overdue for the Credit Card banks to have some real competition….of course, time will tell if CurrencC is an appropriate competiting technology to take on the Banking Status Quo.

            But what we do know is that generally speaking, the Consumer is who wins from increased competition …so from this perspective, I’m not necessarily opposed to CurrenC: probably what would be ideal would be for it to be viable _enough_ for the Banks through ApplePay to roll back their fees to only 1%.


            1. Some appropriate observations, -HH.

              More merchants used to offer discounts for cash. Legal/contractual gyrations stopped most of them. Now that that is loosened, some of doing it again. It depends on the industry though. One reason some merchants give a cash incentive is to get out from under the control of the banks letting consumers refuse to pay for whatever reason. Many times, consumers abuse that and the merchants are unfairly hurt. By accepting cash (or checks), merchants don’t have to worry about that at all. It’s worth it to many to encourage cash payments.

    2. ApplePay does not increase the fees merchants pay, or increase any fee for consumers. The only ones that pay something are banks, who for the small amount apple gets, also are not responsible for as much fraud protection (which Apple is covering), so their costs likely will go down, making it unlikely that merchants will be hit with higher fees. I can see them getting higher fees for NOT using apple pay.

      1. I never said that ApplePay increases merchant fees. What I said was that CurrentC’s merchant argument that credit card fees are too high is legitimate. Again, I am not supporting CurrentC. But I do support efforts to reduce credit card fees. I am not saying ApplePay will result in higher fees. At this moment, I don’t believe that. I AM saying that credit card fees are already too high with or without Apple Pay. Sounds like there are quite a few people here supporting the banks and high credit card fees they are charging. Strange position, I think.

        1. Problem is with CurrentC is that all liability for ACH transactions lies with you the customer. If any fraud is perpetrated or the merchant disagrees with you on a charge it is between you and the merchant and you have no protection.
          Of course merchants like CurrentC and MCX. They have no liability at all in the transactions taking place. Credit card fees pay for fraud and for the actual fee for producing the transaction. Along with that you as a consumer get comprehensive fraud protection from Visa and Master card and most major credit cards. Credit card fees are typically 1% to 3% of the transaction amount. Debit cards have very low transaction fees.

          1. Very good points, Mechanic. We don’t yet know what protections, if any, CurrentC will have. If none, it would not be worth the risk to use them at all. The risk is already substantially higher than with ApplePay. I question whether they will survive at all for long.

        2. Hg, I agree with you. The fee for credit cards is too high. And it hurts small businesses more than the big ones, percentage-wise. Which leads me to wonder whether using Apple Pay might offset some of that loss by lessening the occurrence of fraud. I’d be pleased to see that result.

          1. Good logic, ApplePostle. I would expect widespread use to decrease fraud. I would not expect much if any of that savings to be passed on to businesses or us. Too many posters here have no experience with small (or large) businesses and cannot see the significant issue that affects everyone. The decrease in fraud could be major — if everyone in the country buys an iPhone!

    3. Maybe Apple could implement an additional optional data set in their Apple Pay APIs to permit merchants to gather purchasing info if the iPhone owner is a willing participant. I don’t know whether Apple’s tokenization implementation would permit this or not. If it did, then Apple Pay would be the best of both worlds with willing customers providing merchants the data they desire (hopefully with some discount benefits to the customer) while avoiding credit card fees. Maybe Apple can’t implement this just yet because that would alienate the credit card companies. But once Apple Pay is established Apple may have more freedom to alter the system and the credit card companies may have no choice but to go along.

      1. JwSc01, I don’t have a problem with that. A fully optional opt-in feature that some customers might see as a benefit (not me, though), could be offered. There really are some decent companies in the world that some of us trust and don’t mind a bit of “sharing.” But it should be fully optional. People should not be forced NOT to share just as they should not be forced TO share. Giving people options is okay with me.
        But, what I really think would be best, is for a customer to swipe a loyalty card that does the sharing fully separate from ApplePay. It seems that offers willing customers the choice to share or not even though an additional step is involved.

        1. Agree with all you said. The loyalty card could be used today.

          But since one of Apple Pay’s major benefits is to eliminate the need to pull a card out of your wallet, why introduce a loyalty card into the process if Apple Pay could incorporate optional customer ID and purchase history?

          1. The advantage of the loyalty card is that it keeps unnecessary data out of the ApplePay system. Currently, many people use two cards regularly, for example, at many supermarkets. That becomes their option. I think many will not be bothered by use of the one loyalty card since ApplePay is so easy it’s effectively not even having to use a card at all. So a consumer would only be using one card, the loyalty card. But I’m open to options down the road, too.

            1. Apple Pay is part of Passbook, and loyalty cards are also part of Passbook. Apple has already said that there will be integration between the two. In fact they even said they are moving more quickly to integrate them, perhaps a year sooner than originally stated.

  6. Doesn’t Apple’s iBeacon solve the merchant concern of being able to track customer purchases? With customer opt-in and merchant loyalty rewards, I’m sure Apple Pay is scalable to facilitate many additional future options while continuing to ensure payment security.

  7. Credit card companies need to stop charging the retailer. They make enough money from those that carry a balance.

    Credit card companies share $50B/month in revolving credit interest. They can afford to reduce or eliminate txn fees. Consumer spending on credit cards is already down more than 10% this year. I suspect fluctuation in consumer spending is difficult to predict and incorporate into revenue projections. So why not eliminate the variable. Revenue projections on revolving credit debt is much more stable.

    And, you would give more money to local businesses to raise salaries which would increase consumer spending and increase debt (assuming people spend more than they make on a percentage).

  8. Meanwhile, CurrentC is at its core a coupon-and-rewards app. That gives companies lots of detailed information about what you buy and who you are.

    Cry me an ocean. NOTHING is stopping stores from using customer cards exactly as they are now. My Walgreens ‘balance™ rewards’ card does ALL of the legitimate marketing surveillance and incentive stuff CurrentC offers, without asking for illegitimate personal stuff like my:
    – Social Security #
    – Driver’s License #
    – Credit Card #s
    – Bank Account #s
    – First Born Child

    Die CurrentC!

  9. There’s no need to revile CurrentC. It’s the Zune of contactless payment systems. Ignore it and it will go away.

    Meanwhile, why boycott stores that don’t take ApplePay? What if a hundred customers went into a store like that, tried to use Apple Pay, then apologized that they “forgot” the store doesn’t take it, then made a production out of paying a different way.

    (“Oops, not enough cash. Do you take checks? Oh, never mind. I have a credit card. Now, where is it. Hm. Shall I use this one or that one? Oh! Here’s the other one. I’ll use that. What button do I push again? Oh, sorry, wrong one. Can we go back a step? My signature didn’t come out right, does that matter? You want my zip code? Okay. Drat, what was I thinking? That’s where I used to live, can I do that again or does it matter?”)

    I think that would be more effective than a boycott, especially since some stores will be hard to avoid.

    1. That would certainly inconvenience other waiting customers while the cashier won’t care as much. They have to be there all day anyway. It’s the upper level folk who need to get the pressure — not the cashiers alone.

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