MCX Confirms Retailer Exclusivity for CurrentC Mobile Payments, but No Fines for Leaving Consortium

[Tumbleweed666]

"Many have also already invested significant amounts of money in the CurrentC effort, money that would be lost if they stopped working with MCX. "

Its dead money anyway. The CurrentC app has no chance when its far more complex than any other solution by orders of magnitude and opens up the user to having the bank account siphoned dry.

 

[samcraig]

But consumers want to pay on credit. Reduce those options or convenient and secure ways of paying on credit and people will shop elsewhere. What you make up in smaller fees to banks/CC companies is more than offset by the lost revenues due to fewer sales. They'd need to offer some pretty big discounts to get people to give up their credit cards. After all that would the merchants really be coming out ahead in the end?

With my example and explanation (again) - where do you see that retailers are eliminating the ability to pay with a credit card.

 

[HobeSoundDarryl]

What would be really nice is if this more secure payment system appleay, Google Wallet and any others that use the same methodologies and underlying technologies) helped reduced fraud and retailers were able to push them to lower those transaction fees. It may be a pipe dream, but it's possible. That said, I imagine it may well be like taxes, once they're set, they will only ever go up and not down. We shall see.

Correct. Everything you say here makes great sense me except the idea that maybe the bankers would willingly or be pressured to lower transactional fees. Instead, through the greater security and less fraud that comes with an Apple Pay solution, the banks will enjoy the extra profit in that lessened fraud.

The only way transaction fees go down is for real competition to step in and pressure it down or for Government mandates. The banks are unified so they won't have a price war to drive such fees down. And if we want to believe the Gov might do something, look up who makes the largest contributions to campaigns for both parties.

I like the CurrentC concept because at least there is an effort to create some alternative with a goal of reducing those fees, backed by some deep-pocketed retailers so that the banks can't readily just crush some fledgling maverick competitor. I doubt it has much of a chance against the big banks (especially since Apple is partners with the latter at least for now) but at least it's an effort. There's always a chance that Apple might decide to support that platform too, which would then remove the Apple bias in all these arguments and shift it to where I personally thinks it really lies: the "as is" underlying system vs. CurrentC. Once one removes Apple from the equation, it turns into a simple concept of continuing to flow a share of every sale to very rich banks vs. an alternative system that might reduce that share (which then helps the retailers who are actually selling us the stuff we want to buy).

Yes, there's stuff about the CurrentC concept I don't like too. But I do like that part of the concept. And, given the losses of short-term revenue some of these companies are enduring, I suspect that part is the dominant piece of why they are even trying to bring it to market.

 

[ee4life]

possibly.. i don't know.
they need the info in order to access your bank account though.. i mean, how else are they supposed to get paid?

Paypal lets you link your bank information, and doesn't require an SSN to do it unless you are a high-volume merchant.

Why would MCX need it?

 

[zhenya]

For about the 20th time now, this is not about completely killing CC companies- just an alternative. We've had alternatives all along (we could pay with cash or checks or barter or layaway). Even if retailers desperately wanted to cut out bankers, they couldn't do it because some consumers won't be forced to change. And that's how it should be.

Except that it's not an alternative if they are actively blocking other digital services that can barely be seen as competition. All ApplePay and Google Wallet do is convert your existing credit cards into a more convenient and more secure format.

I know all about the costs associated with accepting credit cards as most of my family is in small business. You're delusional if you think CurrentC has anything to do with them. Yes, those large retailers would love to cut out the credit card fees, but with this system as it is currently designed forgot to put any value in it for the consumers. I often pay with my credit card even when I don't need to because it gives me a tremendous amount of additional protection for their fees. Furthermore it's false economy for a business to assume that they would make 2-3% more on their entire volume of business if they didn't pay card fees. People spend considerably more money when they use cards vs. cash or debit. As such the retailers can't take the point of view that they would have earned 2% more on every purchase when MANY of those purchases would not have occurred at all if not for the availability of credit!!

Really, this discussion, and every other one going on all over the Internet right now is so negative towards MCX not because people object to businesses trying to find an alternative to credit card payments, but because CurrentC was designed to do so in a way that had only the interests of the retailers in mind. There is nothing in it for consumers other than the nebulous promise of 'rewards'. The fact that they have this ridiculous anti-competition clause is probably the nail in their own coffin.

 

[CB1234]

yeah, that does seem stupid right now.. but if the idea is changing the way consumers pay retailers over the next couple of decades then this week's news is nothing.. it's more important (imo) to consider where we'll be in a few more years once a new system is commonplace/widespread.

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lol

When you talking of new system being widespread do you mean MCX?? If you do, then I feel it will be a non starter (imo).

MCX system is based on mining data and lining their own pockets instead of the bankers. If it was based on consumer convenience and security, then no doubt they would win...

 

[ateslik]

The government will eventually step in to squash this issue.

I think you mean skuash this issue.

But the real question is what heck is that in the second drawing? It looks like a shirt collar... or a fortune cookie... or a weird vajaj

 

[HobeSoundDarryl]

Sorry if I have little sympathy for Walmart and its profit margins. Do you have data that backs up the meme that banks and credit card company fees are unreasonable for the service they provide? I think it's unfortunate that consumers are in the middle of Walmart's beef with Visa.

I appreciate the call for data to back a point. So I'll flip it. Do you have data that backs the meme that banks and credit card company fees are reasonable for the service they provide? If you want to go to the time and trouble to gather solid data to support that case, I'll go to the time and trouble to gather solid data to refute it.

Otherwise, this is a board of opinions and each person can weigh opinions relative to what they know of such matters. While Walmart is the biggest name in support of this alternative, the ramifications of the adoption of a system that could work for the masses and significantly reduce those transactional fees would help every retailer on the planet keep more profit. While that includes gigantic companies like Walmart, it also includes your local Mom & Pop stores that barely eek out a living. Personally, I'm far more interested in the alternative for the latter than the former.

 

[zhenya]

I think you mean skuash this issue.

But the real question is what heck is that in the second drawing? It looks like a shirt collar... or a fortune cookie... or a weird vajaj

Image

I think it's the QR code scanner. Yes, that's additional hardware that most of these merchants will be required to purchase in order to be able to use this system...

 

[Patriot24]

So, who wants to take bets on which retailer leaves the consortium first?

I'm going to go with Best Buy simply because they seem the most vulnerable and can't afford to be seen as "not with it" by the tech crowd.

 

[zhenya]

I appreciate the call for data to back a point. So I'll flip it. Do you have data that backs the meme that banks and credit card company fees are reasonable for the service they provide? If you want to go to the time and trouble to gather solid data to support that case, I'll go to the time and trouble to gather solid data to refute it.

Otherwise, this is a board of opinions and each person can weigh opinions relative to what they know of such matters. While Walmart is the biggest name in support of this alternative, the ramifications of the adoption of a system that could work for the masses and significantly reduce those transactional fees would help every retailer on the planet keep more profit. While that includes gigantic companies like Walmart, it also includes your local Mom & Pop stores that barely eek out a living. Personally, I'm far more interested in the alternative for the latter than the former.

That system already exists and is integrated into nearly every POS system in the world. Stores could cut out the credit card fees RIGHT NOW by marketing and/or giving people an incentive to use their debit cards instead of credit cards. The VAST majority of POS systems default to a credit card transaction. If credit card fees were the real issue there is a TON of things retailers could already be doing to minimize their cost.

The fact that MOST people choose their credit cards over their debit cards speaks volumes about how successful CurrentC is likely to be in the real world. CurrentC is MUCH more convoluted to use than the system that is in place RIGHT NOW which requires only your PIN (and gets you out of signing a receipt). People choose to use their credit cards for a reason. CurrentC isn't going to change that.

 

[HobeSoundDarryl]

What about people that prefer to pay on credit? I choose to not keep a lot of cash in my bank account. I put as many bills as possible on my credit card and pay it off every month. Or how about those that can't afford to have everything taken out of their checking account immediately? You seem to just be looking at it from the angle of the fees retailers pay to the banks/CC companies. I known plenty of people who would have a hard time not being able to pay on credit.

I've said nothing about forcing anyone to do anything. This is just an alternative platform, like the "as is" or Paypal or using Points to buy an airplane ticket. Best I know, this is NOT about destroying CCs so those- like you- that prefer to use CCs will keep right on using them. Apple Pay, Paypal, Google Wallet, etc didn't destroy any other form of payment that existed before it either.

As is so typical here, people seem to see a topic like this in extremes or want to spin it as if it is in extremes. This not an either/or- just another option. I suspect if it makes it to market, we consumers wouldn't even be able to tell that any given merchant supports it unless we want to proactively adopt it as our favored way and then use some custom app to be able to do so. If it makes it, I suspect Apple Pay will just evolve to work with it too, so the very same way someone buys something with Apple Pay now will carry over.

If it brings some alternative payment option (not a CC), then that option would be chosen with Apple Pay for anyone that wants to pay that way. However, if they don't want to go that way, they use their CC or whatever else they typically use in Apple Pay.

 

[hudson1]

Ah, you're right, I found this upon a bit of searching. I was misinformed.

http://www.federalreserve.gov/faqs/currency_12772.htm

It will be interesting to see where this anti-trust inquiry goes. On the one hand, there is a collaborative restriction on the processing of a payment. On the other hand, there's no restriction on the actual means of payment. The credit cards loaded into your iPhone can still be used the same as ever... you just need the card itself and not the iPhone. Therefore, MCX isn't forcing you to use their system or even their own credit card. We'll see.

 

[tom123]

No longer a credit card

So if MCX pulls the money directly out of your checking account, it's not really a credit card anymore is it, more like a debit card.

Kinda like writing a check, that is cashed very quickly.

 

[HobeSoundDarryl]

Yep, and they'd stand a better chance of achieving that by doing traditional retailer stuff to delight their customers, instead of playing cheapskate banker.

Like Apple did by getting into non-computing business like Apple Pay? Let me guess: it's fine for Apple to spread out into non-traditional products or services but other companies should only keep doing what they do. Only Apple can try new things.

 

[glxyjones]

I don't think they are trying to screw over Apple or Google. I think they are trying to escape the burden of enriching big banks with every single CC transaction they process in their stores. Apple Pay and Google Wallets are just layers above that. This is a battle below Apple and Google. A primary goal appears to be to reduce the amount of money that flows to the big banks with every CC transaction.

"We" make it an Apple rally only because there is such a thing as Apple Pay. Step back a few months ad "we" would not give a hoot about this effort OR, with Apple seemingly uninvolved, we might be able to look at it objectively and see it as small, tight-margined retailer vs. big, deep-pocketed banks. I wonder which side "we" would take if there was no Apple Pay?

I'm not against incorporating a better system than the one currently in place that gives an obscene amount of money to big banks. However, at this current moment in time, if I pay for a product out of my bank account or credit card, I pay the same price. With the credit card I get added security and rewards, so as a consumer, why on earth would I choose the alternative? Now if those retailers can somehow split the profit they'll recoup from cutting out banks with me, the consumer, and assuming those rewards would be greater than the 1-2% rewards I receive, of course I would side with the retailers.

However, if this were to succeed, the retailers would be cutting out an extreme large revenue stream to the big banks, who will not idly sit around and accept it. Perhaps they would even up the ante and attempt to lure customers back with even greater rewards...?

Regardless, this is going to be an epic showdown and I can't wait to see what happens.

 

[samcraig]

Why do people assume that there's no customer benefit for CurrentC. Is it because of that article that was posted?

Target has their red card which offers 5% off and free shipping. Is it not possible that members of MCX will be offering incentives and other loyalty benefits attached to using CurrentC?

I really don't understand why some people keep insisting that MCX is all about them and offers nothing for the consumer. The biggest leap in logic there is that it hasn't even been rolled out yet.

I'm not advocating for or against MCX. But there are some very overgeneralized assumptions being made here.

 

[hudson1]

Like Apple did by getting into non-computing business like Apple Pay? Let me guess: it's fine for Apple to spread out into non-traditional products or services but other companies should only keep doing what they do. Only Apple can try new things.

Apple isn't forcing anyone to use ApplePay. What they did do is design a system that they believe addresses consumer's dual concerns for convenience and security. What other system out there comes as close to meeting those goals?

 

[oddnendz]

That's what I was led to believe also, based on earlier reports of how
CurrentC worked. But if you read the article or the blog post, you see
this:

Provide consumers with multiple ways to pay at their favorite merchants, including merchant gift cards, credit cards and debit accounts and personal checking accounts. MCX has plans to add additional forms of payment, including credit cards.​

So, it looks like CurrentC may support Credit Cards after all -- unless
it's just referring to store credit cards.

I believe it is store credit cards.

 

[HobeSoundDarryl]

HobeSoundDarryl

I understand your comment about eliminating the credit card fees. The problem of increased inconvenience can be eliminated by changing the system. What you haven't addressed is liability. I had someone buy a Dell computer on one of my credit cards. I never got charged. In fact the credit card company called me about a suspicious charge. I have replaced cards after Target and Home Depot got hacked. I am tired of it. I don't see CurrentC addressing that. In fact I see them giving direct access to my bank account and pushing liability back onto my shoulders. I don't use debit cards for the same reason. Apple Pay gives me better protection against fraud and makes the consequences of fraud smaller. If my phone is stolen and I disable my phone I don't need new cards. CurrentC will need to address both ease of use and liability before people will embrace it. It would be much better for MCX to work with Apple on an MCX card that bypassed the credit card companies. However, MCX would have to back it up with a strong liability statement equal to or better than what is provided when using a credit card.

Look I don't have all of the answers. I don't work for MCX/CurrentC. If they are going to come up with an alternative that might work against the "as is", they'll have to think through such topics. Relative to your Dell Computer fraud scenario, there is a chunk of profit on transactions that addresses fraud and then another chunk that covers rewards and then another chunk that ends up in the banks coffers. I suspect all but that last chunk is relatively small.

Let's imagine that you dig a hole in your yard and find an endless supply of something that makes you richer than any big bank. And let's further imagine that you decide you want to offer a new CC with all of the same benefits as other CCs. However, since you are already rich beyond measure, let's further imagine that you decide to run the whole business as a non-profit. Your CC will still have a little profit to cover a Dell Computer fraud scenarios. Your CC will still have a little profit to cover rewards. But you're not in it for a bankers profit so you leave that with the retailers (in the form of lower merchant fees). Your CC works just like any other CC from a consumer's point of view and the retailers don't have to pay even close to what the pay the other CC banks in terms of transactional fees.

If the big banks don't knock you off, legally maneuver to prevent you from being a competitor or get the Gov to squeeze you out, etc what happens? Consumers are happy with another CC alternative. It's largely transparent from their point of view. Retailers are thrilled to have an option that costs them a lot less than the big 4. They'll probably encourage usage of your card over the big 4 (while still accepting the big 4 too). Consumers will still get their goods. Retailers will make a little more money. Banks that might have other wise got their usual share of what are now your CC transactions will feel a little pain (which they'll just make up for in a multitude of other ways big banks make money).

How an MCX or any other alternative can deliver as much of the consumer benefits associated with the "as is" while costing the retailers less money is by simply cutting the cut that is net (bankers) profit after Dell Computer scenarios. Even a little cut to that could be a lot for the Mom & Pop retailers.

 

[oddnendz]

OK so what does that mean? How do they "hurt" Visa? By giving Visa less of their revenues for everything they sell. I feel no particular sympathy to a company the size of Walmart but think it through to the small Mom & Pop. Try the local bike shop or non-franchise restaurant. That 2% or so can be a lot of their profit. Do they "hurt" Visa by making other payment options available to their customers such that some of their customers choose to pay through those alternatives? Could it "help" that Mom & Pop store though if some customers would pay through such alternatives so that that 2% or so stays with Mom & Pop?



They won't force anything on anyone. They just offer it up as an alternative. Ever use PayPal? That's an alternative platform too. To set it up you link it to your bank account and you can make virtual check transactions when you buy something. PayPal will also allow a person to attach some credit cards to the file so you can also pay with CC through PayPal. Then it defaults to the virtual check transaction. Every single thing I buy that works with PayPal could be paid with a CC but sometimes I'll use the bank transfer (default). Paypal is not forcing me to pay only one way. And I doubt this would force anything either.

I think plenty of people have issues with Paypal. I linked mine to checking account that barely has any funds in it due to the horrors stories about Paypal. I use my CC thru Paypal to pay for things. Money that is paid to me through Paypal gets dumped in the checking account and moved to another account as soon as it available.

 

[Arran]

Let me guess: it's fine for Apple to spread out into non-traditional products or services but other companies should only keep doing what they do. Only Apple can try new things.

No. I disagree with your "guess" entirely.

Anyone can try anything, but they'd better be competent if they expect to succeed.

----------

Why do people assume that there's no customer benefit for CurrentC.

Because we're not seeing any evidence, nor are CurrentC giving us any.

Are consumers supposed to imagine benefits for themselves? Can't see that ending well.

 

[HobeSoundDarryl]

That system already exists and is integrated into nearly every POS system in the world. Stores could cut out the credit card fees RIGHT NOW by marketing and/or giving people an incentive to use their debit cards instead of credit cards. The VAST majority of POS systems default to a credit card transaction. If credit card fees were the real issue there is a TON of things retailers could already be doing to minimize their cost.

Debit cards as implemented now does have bank fees and has a fundamental flaw vs. using a credit card that even the dumb masses can recognize. When you use your debit card, you often have to punch in a pin. Sharing your card and pin with stranger (retailers) feels much more insecure than just using a credit card. Sure there's some situations where a Debit Card is processed like a credit card (no pin entry) but it's not always easy to tell if that will be the case for any given transaction. Thus, using a CC feels both safer and easier than using a DC.

The fact that MOST people choose their credit cards over their debit cards speaks volumes about how successful CurrentC is likely to be in the real world. CurrentC is MUCH more convoluted to use than the system that is in place RIGHT NOW which requires only your PIN (and gets you out of signing a receipt). People choose to use their credit cards for a reason. CurrentC isn't going to change that.

By that logic, Apple Pay should also be viewed as having little chance of success because "The fact that MOST people choose their credit cards" over Apple Pay. Furthermore, to use Apple Pay, you have to lay out some money to buy an iPhone (and only an iPhone, as Apple Pay won't work with any other phones). If we're going to use a "most people" argument, it will be a very long time before "most people" are choosing Apple Pay over many other alternatives. That doesn't automatically dismiss Apple Pay as a poor alternative.

I agree that as it's spun so far, CurrentC is convoluted but that doesn't mean the final incarnation of it that arrives next year will be that way. The group behind it have been exposed to how easy transactions can be done with Apple Pay. That will set a bar. They'll either aim for that bar or bring something to market that is harder to use. The latter makes little sense for what should be smart people involved in trying to make this happen. So I suspect what comes to market next year (if anything) will be much less convoluted than what we know about it now.

 

[ee4life]

Why do people assume that there's no customer benefit for CurrentC. Is it because of that article that was posted?

Target has their red card which offers 5% off and free shipping. Is it not possible that members of MCX will be offering incentives and other loyalty benefits attached to using CurrentC?

I really don't understand why some people keep insisting that MCX is all about them and offers nothing for the consumer. The biggest leap in logic there is that it hasn't even been rolled out yet.

I'm not advocating for or against MCX. But there are some very overgeneralized assumptions being made here.

First, if this is about credit card fees, then offering flat discounts basically nullifies the gains.

Second, they have explicitly blocked all competing mobile payment solutions. Do you have to offer something better when you don't have any competition?

Targeted coupons are hardly much of an draw for me. "Hey, come back and buy this stuff we think you'll like!" Barf.

I don't think it's much of a logical leap to assume that no matter what "incentive" they cook up, the customer will end up paying for it somehow. Either that, or we become the product.

 

[zhenya]

Why do people assume that there's no customer benefit for CurrentC. Is it because of that article that was posted?

Target has their red card which offers 5% off and free shipping. Is it not possible that members of MCX will be offering incentives and other loyalty benefits attached to using CurrentC?

I really don't understand why some people keep insisting that MCX is all about them and offers nothing for the consumer. The biggest leap in logic there is that it hasn't even been rolled out yet.

I'm not advocating for or against MCX. But there are some very overgeneralized assumptions being made here.

Because the benefits are nebulous and defined at the individual retailer level. A few might offer a discount. Others might offer rewards. But we have no idea what it will actually be. Further, these same merchants could be offering incentives today to customers who pay by cash or debit card. The fact that few of them actually do speaks volumes about their intentions. If Apple had designed CurrentC the customer benefit would have been the highlight - something along the lines of 'And we have over 200 retailers on-board TODAY who have committed to a 2% discount for customers who pay with AppleDebit.'

Apple nearly always has the customer in mind when they launch new services like this - from the original iTunes music store, to the launch of the iPhone where Apple wrenched much needed control from the carriers, and so on. Everything we've seen from MCX has been anti-consumer. What are we supposed to think?