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  • The Apple Pay Conundrum

    November 7th, 2014

    Shortly before starting this article, I went to the nearest Walgreens store to buy some batteries for my Apple Magic Mouse. When you get the low battery warning, you only have a short time to replace them.

    Now understand that Walgreens is seldom the cheapest place to buy anything unless it’s on sale, or you have one of their rewards cards, which occasionally works with one item or another. But I needed those batteries yesterday and didn’t have time to get to a store with a better price.

    I might even have been tempted to give Apple Pay a try, since Walgreens supports NFC-based mobile payment systems, and that includes the seldom-used Google Wallet. But my bank hasn’t yet opted to support Apple’s payment schedule, and the same is true for my one-and-only credit card. Well, at least not yet.

    In talking to the store clerk, he said that, over the years, he recalls meeting just one person who used Google Wallet for a store purchase, but he wasn’t sure about Apple Pay. So it is very early in the game. Support from banks and merchants is a work in progress, and some larger retailers, including Walmart, are experimenting with CurrentC. Supposedly if a retailer signs up to beta test CurrentC, it’s an exclusive deal for the time being, though it’s not certain whether a dealer will have to pay a penalty, or lose access, if they opt to accept other payment systems.

    Without going through the advantages and otherwise of each system, it does appear Apple made a large effort to make the scheme as secure as possible, and prevent retailers from gaining any access to your payment and other identifying information. But a sale is a sale, and I suppose if they want to get your email address and other contact information to send you marketing spiels, you can always give it to them voluntarily.

    Now in a high-profile rebuke to Apple, both CVS and Rite Aid, two rivals to Walgreens, opted to shut down the NFC feature on their point-of-sale terminals when it was disclosed it worked with Apple Pay. I know that if I walked into one of those stores when this happened, I would have vowed never to return. But corporations are no smarter than individuals in sometimes making stupid decisions.

    Yes, I do understand that the company behind the CurrentC checkout system, MCX (Merchant Customer Exchange) is perfectly entitled to push their own methods and let the marketplace decide. But when they enforce exclusivity, even on the short term for the beta process, they are taking away some of your payment options. Besides, CurrentC is not widely available, and won’t be until 2015. So how does a retailer lose by accepting payments via other mobile systems in the meantime?

    One answer is that, if you become accustomed to using Apple Pay, as an example, you may not care a whit about CurrentC when it debuts. I suppose that’s the danger, but so be it. Customers should be given a variety of different methods to pay. Some retailers even accept Bitcoin, though I remain concerned by the safety of that system.

    So if you want to use cash, a credit card, a debit card, a check or even PayPal, the retailer who accepts these payment methods is more deserving of your business. If they are equipped to take Apple Pay and Google Wallet, more power to them. You have choices, so where’s the problem?

    Well, I suppose if a retailer has a method that sidesteps credit card systems, and thus the need to pay a percentage of each sale, it means more revenue. As innovative as Apple Pay seems, it is still using the traditional credit card merchant processing system. Apple may get a small piece of the action, but the retailer is paying the same rate. It’s the cost of doing business.

    Let’s assume that CurrentC does go live next year, and assuming retailer exclusivity is no longer required. At that time, customers will decide which payment systems work best for them. Retailers will have a fair shake at making it convenient for customers to buy their products or services. There’s nothing wrong with that.

    Or is it possible the folks at MCX aren’t fully secure that they have devised the most safe and flexible mobile checkout system? It’s not that it’s necessarily the easiest, since it requires an intermediate app to make the transaction. Even aiming your iPhone 6 at a checkout terminal to bump and make an Apple Pay transaction may take some practice. Remember that the transaction also has to be finalized via Touch ID.

    It’s also true that there’s a finite number of potential Apple Pay customers at the start, and even if the iPhone 6 and iPhone 6 Plus are in the hands of tens of millions of customers by the end of the holiday shopping season, the vast majority of mobile gear out there won’t be compatible. It will take another year before there are enough of these handsets in place, along with the Apple Watch, to make a reasonable dent in the marketplace.

    At the same time, dealers might be reluctant to commit to a checkout system that only works with one product line. Over time, Apple might want to consider making Apple Pay an open standard at the expense of losing its status as an exclusive feature. There can still be hardware requirements that will ensure security regardless of which mobile platform you support.

    Sure Apple might prefer to keep Apple Pay in the family, but that will continue to limit access to the system.



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