Why CurrentC is not all bad

[Armen]

Like many, I am excited by Apple Pay and the potential to disrupt payment services with customer security in mind. I am also peeved that companies like CVS who are backing CurrentC are now disabling NFC payments.

But what is CurrentC really about?

Techcrunch has the best article I've found so far on really understanding the motivation behind CurrentC: http://techcrunch.com/2014/10/25/currentc/. It is worth reading to understand what is at play here.

Essentially, there are two areas that need disruption:
- security for customers (Apple Pay)
- credit card fees for merchants (CurrentC)

Why should you care about the latter? Briefly, merchants have to pay fees + percentage of sale on each transaction. Say, 2% plus $0.35. If you use an "affinity" (miles/rebate) card, the merchant gets charged even more on the transaction, and the credit card company makes even more out of the deal, kicking some of it back to the consumer to lure the consumer to make more money for the credit card system.

This increases cost to merchants and end prices to customers, while pros include fraud protection, extended warranties, and other consumer benefits perceived to the individual (but weigh against consumers in the aggregate).

CurrentC is essentially an effort to break to merchants' dependence on this system, but may be deemed a success on their end if they can just gain leverage on the credit card companies to reduce the costs. In the end, this potentially is good for the consumer, too, but the pessimist side of me feels that the merchant would keep the profit with no benefit to the consumer!

CurrentC is horribly flawed, especially from the consumer side, but the really unfortunate thing is that neither CurrentC nor Apple Pay is a solution to BOTH problems and in being separate cause them to conflict with each other.

We either need them to join up or we need someone to step in with a disruptive solution to both issues. Or we will just have to wait until CurrentC fails!

----------

CurrentCis also about merchants being able to mine customer data. However, there are merchant solutions for that that do not conflict with Apple Pay and therefore is left out of original post.

CurrentC needs your health info, Social Security number and other personal information.

Yeah, sorry I don't need someone to have all that just to buy a chocolate from Rite Aid.

 

[Smoothie]

Do you really believe that a merchant using CurrentC will pass along any savings in CC fees to the consumer? I doubt this will ever happen. CurrentC appears only designed to increase profits for the merchant.

 

[CoilTap]

Do you really believe that a merchant using CurrentC will pass along any savings in CC fees to the consumer? I doubt this will ever happen. CurrentC appears only designed to increase profits for the merchant.

Exactly. They're trying to get out of paying credit card fees, so they're certainly not going to allow a similar loss of revenue by way of discounting.

 

[TonyC28]

Here's why I do not care one iota about the merchants paying credit card fees: because CONSUMERS have been paying them for quite some time. Does anyone really think a company like Walmart doesn't account for the cost of credit card swipes knowing that the vast majority of people pay this way? This has been a cost of doing business for a long time and like all others they are paid for by the consumer. If everyone in the world was paying cash for things everything would cost just a little bit less.

CurrentC might not be the worst thing in the world, but if the debate is going to be Pay which sounds extremely secure and anonymous for the consumer versus CurrentC which requires even more information than a standard credit card with the added bonus of giving the merchant even more of your info.....this is going to be a very short "war."

 

[JayLenochiniMac]

I'm curious how many folks in this thread have had their checking account info stored in PayPal's "cloud" for years?

I don't. In fact, I've refused to "validate" my account by linking my bank account, but paypal will still work for buying and selling if you don't do this and have just a CC card on file. You just won't get your money as fast.

I did have to close a previous paypal account once I reached the $10,000 lifetime spending limit, at which point they require linking a checking account, and opened a new one. Now I try to avoid paypal whenever possible and pay with a one-time CC if I do need to use paypal (not sure if this will count toward my next $10,000 limit, but I can always open a new one if necessary).

 

[aristobrat]

Exactly. They're trying to get out of paying credit card fees, so they're certainly not going to allow a similar loss of revenue by way of discounting.

Maybe.

There are merchants that currently give discounts every time you pay with one of their cards that reduces normal interchange fees.

Target, Home Depot, and Lowe's all give you 5% off of every purchase you make with one of their cards (although AFAIK Target is the only one that has an option to directly ACH to your checking account). Best Buy gives you 5% back in rebates.

Doesn't seem unrealistic to think that discounts for CurrentC (which also reduces their interchange fees) are within the realm of possibilities. Why else would anyone bother to signup for for it?

 

[CoilTap]

Maybe.
Why else would anyone bother to signup for for it?

Great question. That's the whole part of CurrenC that it appears nobody within the organization has decided to spend any time thinking about.

 

[Taco1933]

At this stage of credit card usage, it's already priced into goods. Now, they're just trying to double dip. Screw them.

Edit: Unless, of course, they're planning on offering x% discounts for everyone that pays with currentc. Which would make a lot of sense, and would be worth the hassle to some people (not me).

 

[Starfyre]

If a new payment system has to force stores in its own group to shut off other methods of payment in an effort to be able to compete at a later time, how well will it do when they are ready? Shutting off Apple Pay doesnt prevent consumers from adopting Apple Pay and it goes to show how well it will do when it is ready.

 

[Krevnik]

I mean I can sympathize with the merchants on the fact the fees are so expensive (especially if you are a small business) and yet it is almost required to accept them if you want to actually get business (and CCs know this).

That being said, f* them for trying to push on me a system that gives them access to my bank account and makes things worse for me and is not all that easy to use either (and apparently requires you give them an SSN too, F* that).

They want to get around the merchant fees, then find a system that can actually compete well with CCs.

Here's the fundamental problem. The fees, and consumer protections / conveniences tend to go hand in hand here. The fees act in part as an insurance payment that allows the customer to not have to assume liability for fraud. Providing a payment network (which isn't free to do) makes it easier for merchants to accept more payments, and a bank's card to be accepted in more places.

While we can debate on how much of a cut the networks and banks should get, I don't think we can actually get a system with the best of Apple Pay and CurrentC. CurrentC's goal is removing the payment fees, which immediately runs counter to the idea of providing fraud insurance as part of the service. The money to cover the actual fraud has to come from somewhere, and the customer will wind up paying for it in some way or another. CurrentC does it by pushing liability of fraud over to the customer.

As much as I can sympathize with the idea that they can increase their profits by 7 figures through this initiative, what they are really doing is trying to move that cost of doing business onto the customer. And I don't know how you beat CCs without making the customers liable. The other option is creating a MasterCard/Visa competitor and trying to do it in such a way they can charge lower fees. Ask Discover how that's going for them, with less market penetration, and higher fees.

 

[MEJHarrison]

Mining your health data, well that's the scariest thing of all. Bad enough that so many people in health care see your data, including business people and information technology workers, in addition to the health care providers that one would expect could be looking at it. At least they have to have HIPAA training and sign documents saying they'll be terminated if they disclose the data.

I work for a health insurance company. I'm a web developer. So I have access to "the data". If you have any concerns about people like me seeing your data, then you have nothing to worry about. Trust me when I say we all have better things to do than look at some anonymous strangers data. I really don't care that you submitted a claim or what that claim was for or if you've paid your bill or not. It's really not all that interesting. My only concerns are that your data showed up correctly, securely and looked right.

I'm curious how many folks in this thread have had their checking account info stored in PayPal's "cloud" for years?

Or have given their checking account information to their work, to be passed on to some third-party company, for the purpose of direct-deposit paychecks.

I don't use PayPal. I have given my information to my employer. It's not about giving out data or not giving out data. It's about acceptable risk. Yes, my employer has (had?) my bank account number. That's a risk I'm willing to take to get my paycheck faster and easier. It's all about convenience. Also, I've not heard any reports of my employer doing anything inappropriate with that data or any theft of that data.

Would I give Wallmart my checking account info so I can pick up a 6-pack of beer or new pair of shoes? No. First, it's not as convenient. It would be quicker to pay with a standard credit card. Second, I don't have the same level of trust with them that I do with my employer. Third, work is just attempting to provide a nice benefit to an employee. These merchants aren't doing this for my benefit, but for theirs.

 

[caesarp]

I work for a health insurance company. I'm a web developer. So I have access to "the data". If you have any concerns about people like me seeing your data, then you have nothing to worry about. Trust me when I say we all have better things to do than look at some anonymous strangers data. I really don't care that you submitted a claim or what that claim was for or if you've paid your bill or not. It's really not all that interesting. My only concerns are that your data showed up correctly, securely and looked right.



I don't use PayPal. I have given my information to my employer. It's not about giving out data or not giving out data. It's about acceptable risk. Yes, my employer has (had?) my bank account number. That's a risk I'm willing to take to get my paycheck faster and easier. It's all about convenience. Also, I've not heard any reports of my employer doing anything inappropriate with that data or any theft of that data.
.

Maybe that's your take on customer data, but I know of too many instances where employees have taken customer data and sold it or used it for fraudulent purposes. Happens all the time. Usually low level not well paid employees. And you have no idea what hell that than creates, for legal and compliance staff. It could literally cost millions of dollars in notifications, PR, legal fees, fines and other costs. All Cause some single mom earned another $75 bucks, but in doing so took a spreadsheet with 500000 names and SSNs. Not to mention the innocently lost or stolen computers with personal info. Cause companies are too cheap or too worried about affecting other programs to implement encryption on all devices. So your experience iis not the rule. In fact probably the opposite. Particularly in healthcare where HIPPA a regs apply. Healthcare breaches occur every day.

 

[AdonisSMU]

If the retailers want to eliminate the credit card fees the easiest way they could do it without upsetting many many customers would be to require people using a debit card to enter their PIN rather then swipe and sign like a credit card.

Swiping a "VISA" debit card allows VISA to charge the retailer the same fee on the transaction just as if it was a credit card. However, if they require you to use your PIN with any Debit Card transaction that fee is eliminated.

It would be annoying and there maybe a reason they don't do that, but it would do the same thing without majorly upsetting users of Apple Pay/Google Wallet/ISIS, etc.

Banks absorb the fee when people use the Debit Card pin. I don't see Banks joining in on this. In order for CurrentC to work they would've had to make it work for all of the major players in the transaction. Instead, its bad for consumers, banks and CC companies. The only ones who benefit here are the merchants. Had they taken into account the concerns of everyone, CurrentC may have had a chance. As it stands right now, it's dead on arrival.

Merchants are not in the position to call the shots here. People with the money call the shots. In this case that means Banks, CC Companies and Consumers. All any one of these entities has to say is it's not safe enough for me and then they will simply cease to do business.

Lets face it mom and pop shops are all too happy to take cash payments and there is already a larger set of big retailers who do support ApplePay. So people have better alternatives to CurrentC and CurrentC merchants. The Walmarts of the world don't like cash because the human error cost of cash is HUGE. They don't like CC and Banks because of the fees. If Walmart were to run a bank they'd have to get people to sign up for it and now their compliance cost just skyrocketed negating any benefit from CurrentC.

 

[deeddawg]

If Walmart were to run a bank they'd have to get people to sign up for it and now their compliance cost just skyrocketed negating any benefit from CurrentC.

Funny you should mention that... They're outsourcing...

Walmart Now Offering Low-Cost Mobile Checking Accounts Through Exclusive Deal With Green Dot’s GoBank

Made me think of http://www.youtube.com/watch?v=L2tWwHOXMhI

You load sixteen tons, what do you get
Another day older and deeper in debt
Saint Peter don't you call me 'cause I can't go
I owe my soul to the company store​

 

[farmkittie]

I work for a health insurance company. I'm a web developer. So I have access to "the data". If you have any concerns about people like me seeing your data, then you have nothing to worry about. Trust me when I say we all have better things to do than look at some anonymous strangers data. I really don't care that you submitted a claim or what that claim was for or if you've paid your bill or not. It's really not all that interesting. My only concerns are that your data showed up correctly, securely and looked right.



I don't use PayPal. I have given my information to my employer. It's not about giving out data or not giving out data. It's about acceptable risk. Yes, my employer has (had?) my bank account number. That's a risk I'm willing to take to get my paycheck faster and easier. It's all about convenience. Also, I've not heard any reports of my employer doing anything inappropriate with that data or any theft of that data.

Would I give Wallmart my checking account info so I can pick up a 6-pack of beer or new pair of shoes? No. First, it's not as convenient. It would be quicker to pay with a standard credit card. Second, I don't have the same level of trust with them that I do with my employer. Third, work is just attempting to provide a nice benefit to an employee. These merchants aren't doing this for my benefit, but for theirs.

I'm glad you don't look at the data but, believe me or not, I have worked in two health systems and inappropriate data disclosure does happen. One example: A data analyst noticed that an HIV patient was a classmate of her son's. She went home and, though she didn't mention the patient by name, she gave enough clues that the son knew who the girl was and told everyone at his school. The analyst didn't intend for her son to guess who it was. She wanted to talk about it to her son as a cautionary tale so he wouldn't engage in "risky behaviors". She was fired for a HIPAA violation and the health system paid a serious fine and suffered a big PR hit.

In another case, a programmer left his laptop in his car. The car was broken into and the records of 1500+ patients were now "in the wild". Again, this health system also paid a hefty fine and had to be investigated by the OCR (Office of Civil Rights). It may sound strange that the Office of Civil Rights investigates HIPAA violations, but they do. And in recent years they pursue violations vigorously. That's good news for us as consumers of health care but health care data s still being compromised. Sometimes health system employees discuss a patient in the elevator, hallways, etc. But this doesn't happen a lot nowadays, fortunately, because of HIPAA training.

But if non-healthcare-associated entities have your data; well, to me, that's scary.

 

[AdonisSMU]

Funny you should mention that... They're outsourcing...

Walmart Now Offering Low-Cost Mobile Checking Accounts Through Exclusive Deal With Green Dot’s GoBank

Made me think of http://www.youtube.com/watch?v=L2tWwHOXMhI

You load sixteen tons, what do you get
Another day older and deeper in debt
Saint Peter don't you call me 'cause I can't go
I owe my soul to the company store​

GoBank users are provided with a MasterCard debit card

This is why there is a 2-3% per transaction fee. This small Bank isn't even handling the payment processing and even they realize you are not going to gain any traction trying to sidestep the CC companies. They wouldn't be able to pay out the fraud claims should they occur. CC companies provide insurance protection against fraud in addition to maintaining the payment processing infrastructure. That costs money.

Secondly, I don't have any CC Debt. However, CC do provide the payment processing infrastructure here in the US that even banks use for the DC. That is how debit cards came into wide spread use.

 

[Agent47]

I refuse to sign up for anything from a retailer that requires me to give the following information:

• Checking account #
• routing number
• Driver license number
• SSN
• some unspecified health information

I don't care what discounts, coupons and cash back said retailer will give me.

Amen. No way in hell I would EVER give that information to a payment service, retailer. etc. At least my federally regulated bank gives me some degree of protection against fraud and shady merchants.

I hope CurrentC fails even before it launches. It offers absolutely nothing to customers.

 

[deeddawg]

This is why there is a 2-3% per transaction fee.

I thought debit card transaction fees were substantially lower than credit card transaction fees? http://www.cardfellow.com/blog/debit-card-transaction-fees

 

[AdonisSMU]

I thought debit card transaction fees were substantially lower than credit card transaction fees? http://www.cardfellow.com/blog/debit-card-transaction-fees

Cheaper for who? Its not cheaper for the bank as Ive already stated.

It depends on how the transaction is run. As Ive stated previously banks pay the fee when you use debit. However, if you use the MC part the retailers pay. Additionally, the logo allows you to use the card at any MC capable CC terminal. The 2-3% helps pay for that infrastructure.

 

[MEJHarrison]

Maybe that's your take on customer data, but I know of too many instances where employees have taken customer data and sold it or used it for fraudulent purposes....

I'm glad you don't look at the data but, believe me or not, I have worked in two health systems and inappropriate data disclosure does happen....

We could go on all day (in the wrong thread) about this. I've been here 13 years. Years ago some backup tapes were taken from an employee's car who was grocery shopping. So we've been through some of that.

Still, we always hear about the bad things. And that clouds people's judgement. In all my time in the medical industry (going on... 17 years now), I have that single, personal example of when things go wrong. And it was bad judgement and a thief, nothing malicious. Most days it's just us programmers doing our jobs. If someone in my department has ever breached security, or anyone in the company, it's been kept from us. Which seems unlikely as that would be a fantastic learning experience for the rest of the company. Yes bad things can happen to your medical data. Just like bad things can happen to your car, your spouse, your house, and so on. My point was that except for a few exceptions from the news, I don't know anyone who cares about your health data (except for those health care professionals taking care of you obviously). We just don't sit around looking through the database. It's really not all that exciting.

Getting back on topic, I'll be using Apple Pay when possible. I'll use other means when not possible. I will not be using CurrentC. And I'll do my best to avoid those stores supporting it when possible until such time as they allow me pay more securely. I'm fortunate to live in a big city (Portland), so if Target won't accept Apple Pay, it won't really be an inconvenience for me as I can just take my business elsewhere.

 

[caesarp]

We could go on all day (in the wrong thread) about this. I've been here 13 years. Years ago some backup tapes were taken from an employee's car who was grocery shopping. So we've been through some of that.

Still, we always hear about the bad things. And that clouds people's judgement. In all my time in the medical industry (going on... 17 years now), I have that single, personal example of when things go wrong. And it was bad judgement and a thief, nothing malicious. Most days it's just us programmers doing our jobs. If someone in my department has ever breached security, or anyone in the company, it's been kept from us. Which seems unlikely as that would be a fantastic learning experience for the rest of the company. Yes bad things can happen to your medical data. Just like bad things can happen to your car, your spouse, your house, and so on. My point was that except for a few exceptions from the news, I don't know anyone who cares about your health data (except for those health care professionals taking care of you obviously). We just don't sit around looking through the database. It's really not all that exciting.

Getting back on topic, I'll be using Apple Pay when possible. I'll use other means when not possible. I will not be using CurrentC. And I'll do my best to avoid those stores supporting it when possible until such time as they allow me pay more securely. I'm fortunate to live in a big city (Portland), so if Target won't accept Apple Pay, it won't really be an inconvenience for me as I can just take my business elsewhere.

http://www.hhs.gov/ocr/privacy/hipaa/administrative/breachnotificationrule/breachtool.html

 

[Knowimagination]

There is no redeeming qualities of CurrentC... well at least not for the consumer, tons of great stuff for merchants though, but they come at a steep cost.

 

[wxman2003]

I read elsewhere that MCX fines companies for using NFC while under contract. Somewhere in the $500,000 range. If Apple and Google were smart, they would just pay that fine for the major retailers and have them turn NFC back on, as they would recoup that in no time. The retailers would then have a choice to be in the Apple/Google ecosystem, or in the Wal Mart ecosystem.

 

[dddennis]

Meanwhile....

http://www.theverge.com/2014/10/29/7090409/currentc-email-addresses-stolen-hack-mcx

 

[wesk702]

But Apple Pay can be used for debit transactions as well, which have much lower fees than credit card transactions. Wouldn't it be much easier for the merchants to encourage customers to use debit cards, Apple Pay or not?

The Techcrunch article is a good analysis though. Even if CurrentC fails in the end, it might give the merchants some negotiation leverage. In the end, this game is not merchants vs. Apple, but merchants vs. banks.

Well stated