MCX merchants restricted to CurrentC payment system, using Apple Pay incurs fines
Partners of the Merchant Customer Exchange consortium, which include retail giants Walmart, CVS, The Gap and more, are contractually obliged to use the upcoming CurrentC mobile payments solution, a forthcoming competitor to Apple Pay, one report says.
Citing anonymous sources with knowledge of the matter, The New York Times reported on Tuesday that MCX partners are forbidden from using mobile payment alternatives like Apple Pay, lest they incur high penalty fees for broken contracts.
The report confirms suspicions of systematic Apple Pay denial first aroused when MCX merchants Rite Aid and CVS began declining Apple Pay transactions this past weekend. Prior to that, retail monolith Walmart and fellow MCX partner Best Buy said they would not support Apple Pay.
Walmart commented on the matter yesterday, saying MCX has consumers' best interests in mind in denying Apple Pay and other mobile payments options.
MCX is on the brink of rolling out its own mobile payments competitor in 2015 called CurrentC, an app-based solution in development since 2012. CurrentC generates unique QR codes upon checkout, requiring users present their smartphone to a cashier. Alternatively, the point-of-sale terminal may also generate a code to be scanned by the customer.
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. 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, on the other hand, is anonymized, designed to work seamlessly with compatible POS terminals and does not share customer purchasing metrics with retailers. Facilitated through NFC technology, iPhones users can simply take out their handset and authenticate a purchase via Touch ID. On the backend, a secure NFC module monitors for nearby terminals and sends over tokenized payment data from a secure hardware element without need for additional user interaction.
At this point, only iPhone 6 and iPhone 6 Plus hardware is capable of performing in-store Apple Pay purchases, though Touch ID-equipped devices like the new iPad models can make in-app purchases through the payment system's online component. The Apple Watch will also support contactless Apple Pay when it launches early next year.
Apple CEO Tim Cook on Monday said users activated more than one million cards with Apple Pay in the first 72 hours of availability, making it the largest contactless payments service in the country. As for adoption from reluctant merchants like those that make up MCX, Cook said the "skirmish" would ultimately be decided by consumers "over the long arc of time."
Citing anonymous sources with knowledge of the matter, The New York Times reported on Tuesday that MCX partners are forbidden from using mobile payment alternatives like Apple Pay, lest they incur high penalty fees for broken contracts.
The report confirms suspicions of systematic Apple Pay denial first aroused when MCX merchants Rite Aid and CVS began declining Apple Pay transactions this past weekend. Prior to that, retail monolith Walmart and fellow MCX partner Best Buy said they would not support Apple Pay.
Walmart commented on the matter yesterday, saying MCX has consumers' best interests in mind in denying Apple Pay and other mobile payments options.
MCX is on the brink of rolling out its own mobile payments competitor in 2015 called CurrentC, an app-based solution in development since 2012. CurrentC generates unique QR codes upon checkout, requiring users present their smartphone to a cashier. Alternatively, the point-of-sale terminal may also generate a code to be scanned by the customer.
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. 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, on the other hand, is anonymized, designed to work seamlessly with compatible POS terminals and does not share customer purchasing metrics with retailers. Facilitated through NFC technology, iPhones users can simply take out their handset and authenticate a purchase via Touch ID. On the backend, a secure NFC module monitors for nearby terminals and sends over tokenized payment data from a secure hardware element without need for additional user interaction.
At this point, only iPhone 6 and iPhone 6 Plus hardware is capable of performing in-store Apple Pay purchases, though Touch ID-equipped devices like the new iPad models can make in-app purchases through the payment system's online component. The Apple Watch will also support contactless Apple Pay when it launches early next year.
Apple CEO Tim Cook on Monday said users activated more than one million cards with Apple Pay in the first 72 hours of availability, making it the largest contactless payments service in the country. As for adoption from reluctant merchants like those that make up MCX, Cook said the "skirmish" would ultimately be decided by consumers "over the long arc of time."
Comments
Target has partnered with Apple for online payments, but it does not accept Apple Pay in its stores.
While true for many that is equally not true for many.
And those that have ample amounts of money in their bank accounts are not going to trust retailers with their account info
A couple things come to mind. 1) Target, because of their size or because of when they signed up, was able to not have that as part of their contract. 2) The fines are somehow capped so a large company like Target did a cost-beneficial analyses which found supporting more payment options are worth it.
I know plenty of people that use their debit cards as their primary payment method.
http://wh.gov/icBmj
It couldn't hurt too have the DOJ look into this strange case of competing merchants co-owning an entity that requires that they behave like a union to act together against credit card processors.
MCX is doing nothing illegal by finding partners who willingly agree to a contract.
Anyone know the actual $ involved. It could be less to pay up than miss out on ?Pay.
True, but credit cards do give additional rights and protections to the consumer, as well as the various cash back schemes, and so even if one doesn't need the credit, purchasing on a credit card is generally preferable.
It very well could be, but remember that ?Pay isn't yet 10 days old and the number of iPhone 6 series devices is extremely low right now for the marketplace. I say let the retailers some time to see how they can skirt their MCX contract, but I think CurrentC only becomes an issue of real annoyance a year from now when there are 3 devices by Apple on the market, at least two more being made ready, millions of vendors (along with the 2015 law in the US for secure payments), and Apple wanting to push ?Pay to more countries. I really don't think CurrentC has any chance as it's currently setup.
It might be as simple as Google Wallet was never seen as a threat so it was never enforced by MCX.
It couldn't hurt too have the DOJ look into this strange case of competing merchants co-owning an entity that requires that they behave like a union to act together against credit card processors.
Because they're acting against networks that are owned by banks. Who signed a $5.7 Billion antitrust settlement a few years ago. That argument's going to go over real well.
- Forcing me to use only their product
- Forcing me to jump through a more cumbersome process
- Forcing me to use a system that is arguably less secure than a competing one
- Forcing me to tie the solution to my bank account, and
- Limiting my choice and flexibility in payment sources
Did I miss anything, there?
The 'CurrentC' solution is very cumbersome. Not only is it highly unlikely to be as secure as ApplePay, but it forces the user to jump through a lot of hoops to make a payment. Any payment solution needs to be both secure and simple. If it cannot rival or surpass the simplicity of pulling out and swiping a card, then it is going to be very tough for it to gain traction. I don't see any indication in what I have seen of CurrentC that would convince me that it is a better option than ApplePay, nor which would convince me that anyone forcing me to use it had my "best interests" at heart.
I don't understand why anyone in the US, unless they cannot get a credit card due to poor credit, would choose to use a debit card over a credit card. Better points, better protection, and you get about a month's worth of free float. Just keep paying off your credit card online as soon as it reaches 10% of your credit limit, and it will start improving your credit too.
You mean, like the book publishers?
This could be considered to be restraint of trade.
Since this system requires an app from the App Store, which is already there, though it only works for a few people for testing, and in the Google Play store, I wonder if both Apple and Google could tell MCX that if they keep their requirement that their NFC payment systems on the terminals refuse other forms of NFC payment, that they, Apple and Google, will remove the apps from their stores.
If they could do that, it would kill this before it begins. I'm not sure of the legality of this. And. It's too late at night to speak to someone who does.
The system wasn't nearly ready, and Google Wallet wasn't much of a threat, as almost no one has been using it.
Since this system requires an app from the App Store, which is already there, though it only works for a few people for testing, and in the Google Play store, I wonder if both Apple and Google could tell MCX that if they keep their requirement that their NFC payment systems on the terminals refuse other forms of NFC payment, that they, Apple and Google, will remove the apps from their stores.
If they could do that, it would kill this before it begins. I'm not sure of the legality of this. And. It's too late at night to speak to someone who does.
That's brilliant. I hope they both do it, though I highly doubt Google would.
The brilliance in this comes from playing the same card that MCX has. What MCX is doing is blatantly anti-consumer because it forces them to use an arguably inferior product if they want to make mobile payments. So they have no effective grounds to argue against the removal of their app from the store; if they attempt to argue that it limits consumer choice, all that will do is cast a harsh light on their own actions, which do exactly that.
I love it.