NFC, Apple Pay, CurrentC, and Smartphone Competition

Apple Pay rolled out last week, and it’s already hitting some roadblocks as some retailers are blocking or not supporting it. This isn’t because they hate iPhones, it’s because they have a competing product — CurrentC — waiting. A few years ago, companies wouldn’t have dreamed of blocking a new Apple product, but competition has made it easier to say no.

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Let’s look at who is likely to be inconvenienced by CVS, Rite Aid, Walmart, and other retailers not supporting Apple Pay (or NFC tap and go payments in general, including Google Wallet, Softcard, etc.) Apple has sold around 10 million new iPhones worldwide. Let’s assume the majority were in the USA. Of those, only a small percentage at first are likely to trust or understand tapping their phone to pay for a transaction, and even fewer are likely to change where they fill their prescriptions or buy their groceries based on a service that rolled out last week.

On the Android side, there are several million Android phones out there with NFC and Google Wallet (and if they are on Verizon, Softcard). However, Google Wallet and NFC have been in phones for a few years now with very little traction, and Google hasn’t done much to promote the process. It seems like Google Wallet might get a lift if Apple Pay picks up, but there’s still the issue of raising awareness; if the average Android phone user doesn’t know their phone can do that, does it matter if it’s offered?

Then you get to the real reason CVS and Rite Aid actively turned off NFC at their terminals. They have a competing payment standard, called CurrentC (not to be confused with the snake oil product EmergenC). CurrentC goes directly to your bank, meaning it’s almost like an electronic check. Merchants love this because it cuts out the 2%+ they pay to Mastercard, Visa, Discover and Amex, plus it would allow them to capture significant amounts of information about how consumers shop. It also uses QR codes, not NFC, so in theory it has a wider base of potential users. Companies who are part of the Merchant Exchange (MCX) that is spearheading CurrentC have an agreement to not accept competing forms of payment like NFC.

I doubt the companies who turned off NFC terminals expected a major backlash, After all, on paper the only backlash is from a small handful of frustrated users. Assuming they thought this through, they thought they were only losing Apple users; there is no indication that Google would block CurrentC or remove it from the Play Store. Further, Google has no problem with Softcard and other competitors to Google Wallet being preinstalled on Android phones. If Apple were to ban CurrentC from the iOS App Store, there’s still a vast universe of Android (and Windows Phone and Blackberry) devices out there. This strikes me as a calculated risk that they honestly thought would barely ping on most user’s radar.

Instead, it’s banded Android and iPhone users together in their annoyance, and it’s brought a ton of bad publicity to CurrentC. The actual CurrentC platform won’t roll out until next year, but here’s how it seems it will work: you give CurrentC your bank account and routing number, along with your driver’s license number and social security number (they claim the latter two are just for identity verification). Then you do a complicated dance of opening an app, scanning a code, getting a code back, having the cashier scan that code, and then the retailer can debit the purchase directly from your bank account. This skips Mastercard/Visa and their fees, but it also means you’re losing the fraud protection that comes from both of those companies. You also need to trust that CurrentC will not have a security breach that reveals your direct bank and routing numbers, along with your personal identifying information.

It is hard to believe that the average, non-techie consumer is going to jump through those kinds of hoops just to avoid pulling out their wallet, simply because it is complex and sounds insecure; no matter how many ways MCX and CurrentC can swear they’re secure, the average person is going to shrug and use their credit card instead. Techies are going to hate it, because it’s far more insecure than Apple Pay, which uses a two-step authentication to prevent fraud. Even Google Wallet works with credit cards, so you have a far larger umbrella of fraud protection than CurrentC.

A few years ago, Apple was the kingmaker of new technology. As Android has grown marketshare, the innovation has been split among both platforms. It appears the merchants behind CurrentC thought this fracturing meant Apple’s influence had diminished enough that few people would care if Apple Pay couldn’t be used at certain stores. This seems to be backfiring badly on them, as instead there is a near-constant stream of discussion about how CurrentC is a poorly designed platform. And seriously, fire whoever came up with that name. Even if CVS, Rite Aid, and the others remain holdouts, this has brought more discussion and probably educated more consumers about NFC than if no stores had actively pulled their terminals down. Hopefully this proves to be the undoing of CurrentC, and that the increased discussion helps lead to broader Apple Pay/Google Wallet support!

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About the Author

Zek has been a gadget fiend for a long time, going back to their first PDA (a Palm M100). They quickly went from researching what PDA to buy to following tech news closely and keeping up with the latest and greatest stuff. They love writing about ebooks because they combine their two favorite activities; reading anything and everything, and talking about fun new tech toys. What could be better?

6 Comments on "NFC, Apple Pay, CurrentC, and Smartphone Competition"

  1. In my opinion, CVS (the drugstore I regularly use, by the way) has really gone and bungled things. This CurrentC sounds like a disaster, and it is not something I would even consider using. I figure I might as well get points when buying mundane things, so I always use my Amex when picking up prescriptions. If I can’t use Apple Pay, then I’ll just reach in my wallet and pull out my card; I most certainly won’t be handing out my banking info or my social security number to CVS, though. =P

  2. All I have to say is: I told you so.

    Ok maybe I didn’t but I knew that Apple Pay wasn’t going to help revolutionize something that didn’t want to be revolutionized.

    Payment Card Infrastructure in the US, to me, is fraught with problems. First, you invariably have different standards across the board. One retailer has you sign for every transaction. One only signs above 25. One signs above 100. If you are under that you don’t sign at all. Almost EVERY store forces you to have to force your debit card with a Visa or MasterCard logo to work as a Visa or MasterCard. Some force you to enter your security code (a recent development I noticed at some retailers) and others don’t. I have even ordered stuff on the internet without having to put the security code in. All of this could have been replaced with Google Wallet and Apple Pay which gets rid of all of this. The problem? Everyone wants a piece of the pie. It is because of that ANYTHING beyond swipe and pin or swipe and sign will not happen unless a government mandate comes down which is the last thing we really want because it’s going to get screwed up worse than it is now.

    The last thing anyone cares about here is…the consumer.

  3. What’s funny is Google Wallet has worked for YEARS at CVS…and it’s only now with Apple Pay hitting that the tables have turned….now both top mobile phones used what is pretty much the same thing. Now they got stupid and shut it down.

    Not that it mattered though as only us geeks tried it. I guarantee you my mom and dad don’t have ANY idea about any of this.

  4. I think that it is rather bizarre turning this into some delusional anti-Apple thing … oh well.

    Spoiler alert: it ***IS*** fear of Apple – and the useless of Android as a money-making platform – that threw these people into action.

    You say so in your post, then you say the opposite? Makes no sense. Without Apple pay, NFC would NOT be disabled today. Period. Google Wallet and all the rest are no-shows that don’t matter.

    This is about greed – these guys want to be able to charge your bank account like CVS Caremark does for prescription refills … and so they are taking an incredibly awful and insecure route to do so. It isn’t a matter of IF but WHEN CurrentC is compromised … and by disabling NFC they ensure that it WILL happen. Which will then really hurt them and their consumers. It is pretty sad what desparate greed will do to people.

  5. And just to follow up … EVERY time Apple has entered a new area companies have worked hard to oppose them …
    – Music – Apple got control based on fear of Napster, but as soon as Amazon presented an alternative the companies used the DRM-free leverage to raise prices.
    – Movies – companies made sure they weren’t the next ‘music biz’
    – Books – pretty obvious how things went (though by reports Apple is now doing quite well).
    – Set-top – Apple might be #1, but it continues to be a hard-fought battle (personally Amazon has won in our house)

    And so on. So this? No biggie … it is just astounding that someone is looking at such an insecure and cumbersome solution and thinking ‘sounds legit’.

  6. Hopefully CVS and RiteAid will pull their collective heads out of their butts. =P

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