Retailers are disabling NFC readers to shut out Apple Pay
theverge.com
theverge.com
So long as this new system accepts that this is a cost of doing business and implements a customer service policy where the risk is spread among all retail participants, this would be competitive with the status quo.
These merchants aren't going to get out of paying fees, but they should be able to reduce those fees to the cost of providing a competitive service to the credit cards. The benefit is that they won't have to also pay higher fees than necessary to get the benefit of the system.
If they provide this basic safety feature, than upgrading security will be a given since it will reduce a major cost on their balance sheet, which is dealing with fraudulent transactions.
If they do this, then essentially the retailers would be setting up a credit card company of their own. But why would we expect their fees to be lower than the fees from the existing credit card companies?
If a big chain tried to go cash and check only, how well do you think that would go over? Even if they included debit cards, my guess is it would be a big problem. I bet shareholders would revolt. The only reason they may get away with this is Apple Pay isn't established yet so there is no perceived 'loss'. Another commenter was right that if Apple pay impacts their growth numbers they may be forced to reconsider.
Credit card security is better simply because it doesn't take your money directly -- the charge is added to a credit account that you then pay (or not pay if you dispute it).
While debit cards / bank accounts offer the same protection as credit cards, in that you have 0% liability for fraudulent/unauthorized charges, it still can take a period of time in order to "get your money back" after your account has been drained. That can pose serious problems if you are depending on that money to pay rent and other bills. Thus, the effective security of credit cards is in fact higher, because you are not parted from your money while you are waiting for the dispute resolution.
All of this to promote a payment system that literally has a 0% chance of success. As noted in the parent comment, given the history of major retailer data breaches, no one in their right mind is giving these people their checking account information. It's just not going to happen.
I don't think so. If retailers choose to not support a system then the system itself is kinda doom because this system was made for retailers.
The current payment systems are becoming obsolete at a fast pace (faster than I thought anyway). Cryptocurrencies, large chains of retailers rolling up their own payment system, etc.
Just a small comment on security: Most banks suffer serious hacks that you and I never know about it, for obvious reasons. So don't be so sure that banking systems are more secure than retailers.
I disagree. I think people will just wind up using their standard cards if given no alternatives that are viewed as safe by most people.
>Most banks suffer serious hacks that you and I never know about it, for obvious reasons. So don't be so sure that banking systems are more secure than retailers.
True, but regardless, the banks have won the PR war here. For consumer products, that's really all that matters. When it comes to widespread consumer trust, perception is reality.
Europay, MasterCard, and Visa? What about Discover, Diner's Club, or AmEx?
> or Apple itself
Is this supposed to be the app store, OS X, or the old iPod argument?
I don't think that's a normal definition.
"Today Hoover released their new anti-competitive vacuum". Why is it anti-competitive? "They didn't create a network of 3rd party bag manufacturers on day one."
If they were going out of their way to prevent it (such as when Keurig or the printer companies added DRM to stop clones) that's one thing.
Apple doesn't let you choose a different keyboard manufacturer when you buy a MacBook either. Is that anti-competitive? Amazon's Kindle cases don't work with Nook tablets. Is that anti-competitive?
I think you're reaching here.
This isn't true once you get into monopoly territory, although that is not a concern in this case.
If NFC is going to cut their fees or remove them as intermediaries, they might be happy to see it killed off.
Also, I just don't see the banks simply rolling over and losing their beloved credit and debit card fees. They will definitely find ways to make their money (sgentle mentioned through contracts requiring NFC, etc).
I've had a paywave for a while, and have used it at CVS quite a bit. Sort of annoyed it won't work anymore due to this issue.
And giving retailers direct access to your checking account via ACH..uffda.
That's a major violation of Apple's rules. You have to show the reviewers the same app that customers are going to get.
There are currently several Bitcoin wallets on the Apple app store. Blockchain's was even allowed back.
Now that everyone has seen how much the experience has sucked for many participants in those markets, participants in other markets Apple wants to enter, such as ebooks, movies and tv shows, and now payments, are extremely wary about cooperating. They want Apple's solution, but I don't see any new market playing along unless Apple changes their strategy to one that permits openness and competition as a poison pill in the case that Apple continues to treat its "partners" like shit.
Openness is great because it forces the best solution out there to always compete on being best instead of competing by abusing its market position. No market wants to let Apple establish a strong market position anymore.
That all said, there's no way I'd introduce a third party to this, well, party, and give direct debit access to my checking account to someone I don't know, who's security practices I don't know, and who's primary form of interaction is a freaking QR code - and I have nothing against QR, but I would never trust this to a single barcode of any kind. And the retailers are all going through all of this effort simply to avoid interchange fees and the impact ApplePay will have on them.
To me, the winner will be whoever balances security with ease of use, and ApplePay is the winner right now (and I say that having used Google Wallet). I use my existing cards and retailers I already go to, so it feels the same, but no actual, useful information is being transferred, so I'm better protected. All transactions show on my statement as if I'd swiped. If retailers shut me out in favor of proprietary systems that require work on my part, I will vote with my dollars and shop elsewhere.
Apple Pay is just easy enough that I will use it.
The CurrentC app will be just another app I assume, and so will be trickier to use than Wallet or Pay. I'm guessing the retailers disabling NFC at the moment are just trying to stall things until CurrentC is ready. i.e., they don't want people to get comfortable using alternatives before they have a chance to launch their app.
"The application can be downloaded for free from the App Store and Google Play Store. Available for both iOS and Android devices, it is designed to ‘simplify and expedite the customer checkout process by applying qualifying offers and coupons, participating merchant rewards, loyalty programs and membership accounts, and offering payment options through the consumer’s selected financial account, all with a single scan.”
"Using CurrentC mobile payments the point-of-sale displays a QR code for the customer to read with their phone.
"The QR code generates the payment token on the smartphone which verifies the shopper’s presence, identity and initiates the transaction between the merchant and the bank.
"The phone connects with the cloud for authorization and sends the approval to the merchant.
[1] http://mainstreetinc.net/currentc-mobile-payments-alternativ...
Of particular interest:
iPhone 6 includes a separate chip, called the "Secure Element", that is used as part of Apple Pay. Here's how Apple describes this chip:
The Secure Element is an industry-standard, certified
chip running
the Java Card platform, which is compliant
with financial industry requirements for electronic payments.
The Secure Element hosts a specially designed applet
to manage Apple Pay. It also includes payment
applets certified by the payment networks. Credit or
debit card data is sent from the payment network or
issuing bank encrypted to these payment applets
using keys that are known only to the payment
network and the payment applets' security domain.
This data is stored within these payment applets and
protected using the Secure Element’s security
features. During a transaction, the terminal
communicates directly with the Secure Element
through the Near Field Communication (NFC)
controller on iPhone 6 and iPhone 6 Plus over a
dedicated hardware bus.
Full card numbers are not stored on the device or on
Apple servers. Instead, a unique Device Account
Number is created, encrypted, and then stored in the
Secure Element. This unique Device Account Number is
encrypted in such a way that Apple can’t access
it. The Device Account Number is unique and
different from usual credit or debit card numbers,
your bank can prevent its use on a magnetic stripe
card, over the phone, or on websites. The Device
Account Number in the Secure Element is isolated
from iOS, is never stored on Apple Pay servers, and
is never backed up to iCloud.
[1] https://www.apple.com/privacy/docs/iOS_Security_Guide_Oct_20...
Edit: (Unfortunately. I find this story utterly infuriating as a consumer who used Apple Pay at CVS just a few days ago.)
Either way, they'd make it unpleasant because it's their playground they pooped in.
I get the impression that in the US, credit cards are more common than debit cards, and the banks try to keep it that way. Debit cards are also somewhat expensive - customers pay 0.79% on average [1].
In the UK, and i believe in the rest of Europe, everyone uses debit rather than credit cards in shops, and they are much cheaper - interchange fees for debit cards are about 0.2% [2]. Most debit cards these days are also contactless payment devices.
If Apple Pay takes off here, it will be just another contactless payment option. I don't see any great reason for shops, banks, or customers to feel strongly about it.
[1] http://www.federalreserve.gov/paymentsystems/regii-average-i...
1. Isn't Apple Pay/the tokenization it uses is a whole new ball game? The contactless that currently exists in the UK is only for transactions up to 20 GBP, which presumably won't be the case with Apple Pay. Do we know that merchants will only be charged what they currently are for contactless?
2. Your statement that no one uses credit cards in shops seems anecdotal. Do you have a source? Most people I know in the UK do all their spending on a credit card, for a number of reasons. (Me included; I only use a debit card for the few things that have credit card fees - flights, council tax, ...)
Google gets behind bitcoin, integrates bitcoin NFC payments directly in Android, a la Apple Pay.