CurrentC: The Big Retailers’ Clunky Attempt to Kill Apple Pay and Credit Card Fees
techcrunch.com
techcrunch.com
He also that found that its Terms Of Service leaves high
liability for fraud to the user if someone else is able to get
access to a user’s phone and make CurrentC payments.
I'm pretty sure they didn't actually intend for this to be a badly timed Aprils fools joke, but come on. QR code based, no fraud protection, built in spyware, loose integration with any kind of platform security, collecting health information. Introducing CurrentC -- all the safety of carrying your entire bank account balance in large bills in your pocket, all the privacy of HTTP over Verizon LTE.
It's so easy to use, just unlock your phone, open the app, click to active the QR scanner, hope that it scans (but don't worry you can type in the QR data by hand if you need to). The bit about paying at the gas pump had me facepalming like Picard.
I can't even imagine how much they would have to pay me to use this. They take away my free 30+ days of float, my fraud protection, take away the firewall between my bank account and the world. Take away the chargeback defense against a misbehaving merchant. Not to mention a dozen other perks of credit cards, like the cash back rewards, purchase protection / extended warranty, price protection, etc.
I guess Apple couldn't have asked for a better counterpoint to demonstrate the difference between building a product to serve your customers versus building a product to serve yourself. Apple is trying to make credit cards more secure and more convenient, building on top of the existing system, and rent-seeking to the tune of whatever costs they can wring out of the system. Kudos and good luck to them. This CurrentC abomination on the other hand... how did this even see the light of beta?
Edit: In a few months the credit card networks will start to see the difference in fraud and chargeback levels for Apple Pay purchases. I'm really interested to see if there's a significant difference, and what implications that holds for merchants which don't adopt or actively block Apple Pay.
- most if not all of their income comes from transactions/sales. - some significant % of their transactions are paid with credit cards.
With those two things in mind, 2% of a retail transaction might mean a lot more than you think.
Do I think it's a good idea? no.
Do I think a WalMart executive walked through the same chain of logic and found an extra billion? probably.
It's not obvious is what consumers get out of it. What incentive do customers have to use this form of payment? After taking credit card rewards into account, credit cards fees end up making everything <1% more expensive for consumers. That's a small price to pay for the consumer protections that you would give up by using CurrentC instead of a credit card.
they're just banking on the idea that they will make more money saving transaction fees than losing some customers because of incompatible payment methods.
But I have to say, I feel sympathy for the guys who designed it. Just like the conventional wisdom tech entrepreneurs are taught -- "take a problem you encounter in your daily life, solve it, build the solution, and sell it" -- this seems like the same thing happening on the corporate side.
Mike Cook and the retailers have a problem -- they don't like paying 1.5-3% to the credit card companies. And I can't blame them -- there's a huge financial incentive to solve problems like that, and if you're the guy who saved WalMart 2% a year, well, you're getting a big bonus, massive internal recognition, and likely a nice promotion. So I commend this group of retailers for trying to solve a problem they have.
But - man, what a terrible solution. And they've made the huge (and common, and classic) mistake of thinking that by solving THEIR problem, they're also solving our problem. The thing is, we love our credit cards, and now we're loving ApplePay (which genuinely improves on the credit card experience), but there seems to be very little to love about CurrentC.
At least with my credit cards when I have a dispute, the bank isn't wholly owned by the company with which I have a dispute. Under the CurrentC solution, these companies would have direct access to my bank account!
Anyone who uses this is a fool.
ps -- also, when this inevitably gets hacked, instead of sucking money out of your credit cards, your bank account empties. Awesome!
From a user's perspective, the current user experience around credit cards is pretty good. You get a tangible, color coded interface and a tactile interaction mechanism. Swipes work pretty reliably and the time it takes to pull out a credit card is very small.
When you're competing with a solution like this, even minor differences in UX can be dealbreakers. One thing I didn't see much talk about with the iPhone 6 launch was that Apple were the first phone makers (AFAICT) who managed to put NFC on the edge of a device rather than the center. I've tried paying with Google Wallet before and mashing a giant phone against a tiny contactless reader was error prone, frustrating and made you feel like a dork doing it. I tried it 2 or 3 times and then went back to credit cards.
I can't imagine how much worse this CurrentC solution is going to be in real life and how hard it will fail.
I'm not sure what adoption is like in the US, but in Australia pretty much every single plastic credit card (and Visa/MasterCard debit) supports contactless payments, which is an awesome user experience. You literally just pull out the card and touch it to the machine, and some places it's approved in less than a second.
It only works for payments under $100 (for security reasons) - otherwise you chip and pin.
I don't see CurrenC being able to compete with that, chip and pin, or Apple pay...
At the grocery store I shop, people even go to the trouble of entering their phone number to track themselves if they don't have the card, to save a couple of bucks.
Since CurrentC avoids the credit card merchant fees, they can give even steeper discounts to push it.
Which is to say, store discount cards and coupons is basically a solved problem already. Trying to tie that to a payment mechanism just seems futile.
I'm not sure how that particular rumour started but it is inaccurate. Some HTC and Sony phones, from personal knowledge, have their NFC antennas embedded above^W [ Edit from evidence: near ] the camera at the 'top' of the phone.
Edit: Here's a page of antenna location diagrams. It looks like we're actually regressing... notice how Samsung used to have the antenna under their logo but now it's part of the battery housing!
http://www.octopus.com.hk/customer-service/checking-your-bal...
... and here's where it is in the iPhone 6, about the same location as the Sony phones
http://images.techtimes.com/data/images/full/12514/iphone-6-...
This is making the huge assumption that these same retailers who couldn't keep their customers' credit card numbers secure can somehow do a better job with their bank accounts. And for what? So we can get a free cup of Starbucks or a couple percent off a fill up?
The more retailers that get breached (Staples was the latest this week) the harder a sell that is going to be for the MCX cartel members.
A consumer who signs over their bank accounts to MCX is giving up all the protections that they currently have with their credit cards.
2) It's relatively easy to reverse an ACH debit. Which protections would I have to give up?
They say the information isn't stored on your phone like that's a good thing.
Whether it's Google Wallet or Apple Pay users all these stores just ticked off thousands and thousands of early adopters/their customers!
ON a different note I have seen this topic appear yesterday on Hacker News. It quickly was at the top of the page then quickly demoted. This needs and I hope it goes to the top of HN and stays there for a long time! These retailers need their hand forced for their own sake due to a possible PR/consumer backlash.
Needless to say I've since moved on to bitcoin.
Credit cards are drag on consumers and invisible tax created by banking system. They are effortless machines that generates profits without producing anything or adding a significant value. Before you make a case that credit cards protects against frauds, you should know that less than 1/700 of each dollar of credit card transactions are lost due to fraud. So in essence, 99.93% of your transaction fees goes in to bank and other middleman's pockets for no apparent value add. A small part of this CC companies throws at you as "reward" breadcrumbs. Also credit cards are hardly useful as debt instruments because of exorbitant interest rates most of them carry.
What we need is not another mechanism to use credit cards more easily but eliminate them completely. So if we can build a mechanism that identifies you, debits some sort of spending account directly and provide fraud insurance at the rate of 0.07% of your annual charges then we can get rid of all these fat middlemans who are essentially leaching on consumers without a value add. CurrentC doesn't seem like perfect contender yet but it's step in right direction where retailers are fighting back.
All of the above, I can complete in fewer steps than I can using CurrentC. Also, I don't have to give up my health information or join a loyalty program.
If you want to make an alternative to Apple Pay, make something easier to use.
I want Visa to suffer, too. So, I'll likely use this. It's not clear to me if it is point of sale only, or if it'll work in an online context. The QR code thing would be an intolerably bad experience online, of course (and it's a pretty clumsy experience offline)...but, if the payment network is not intimately tied to the method of verifying the owner of the account, I could see it being possible to handle payments without the QR code.
And, if the people implementing this stuff aren't entirely incompetent, I'd be surprised if they don't implement a non-QR code method in the future, including NFC. The end user app really isn't the hard part of this equation.
I'm extremely happy with my iPhone 6, but Apple Pay/CurrentC both seem DOA to me -- I already have it and I don't have to worry about charging my credit cards.
As a side note, I never realized how terrible CC transactions were before we had paypass everywhere. Canadians had to swipe+pin before PayPass. Whenever I'm at a store without PayPass I feel like an animal having to type my pin into the pad.
This is like how people are made to think a new flagship smartphone from AT&T costs them $199.
On the merchant end of things, accepting card payments reduces their exposure to risk from theft (both internal and gun-in-your face type). For the big guys, the fee is in the low 1%.
But you're right about the lack of transparency. If card fees were required to be itemized separately, the whole dynamic would shift dramatically. But as far as Apple Pay and similar systems are concerned, the 0.15% is bitten off the banks' fee already, and the price of the transaction isn't based on cost, but on value. As a thought experiment, imagine if Apple stopped taking a 30% cut of app store purchases. Do you think that $0.99 games would be priced at $0.69? Probably not. I think the same is probably true of merchant fees--that they're not going to--on average-- increase by 0.15%.
We'll know for sure in the next several years though.
Now, imagine a poor or homeless person with bad credit that pays in cash, debit or non-rewards credit card. That person is paying more for the same things compared to you at the store and gets none of those perks.
>As a thought experiment, imagine if Apple stopped taking a 30% cut of app store purchases. Do you think that $0.99 games would be priced at $0.69? Probably not.
Even if not, the developer has 30% more to spend on developing the app, resulting in more and better apps. Apple, meanwhile, is buying back stock and giving dividends with all the extra cash because they don't know what to do with it.
Employees skimming off the till?
But yeah, it's a stupid way to run a payments system.
You would think Starbucks would give you a free cup or something if you filled up your Starbucks stored-value card by EFT instead of credit card. (You would also think Starbucks wouldn't make me accept the wifi TOS every goddamn day, when they have an app/loyalty card relationship with me.)
You would also think that maybe Apple is leaving their options open in the future to 1) link up with retailers' loyalty programs and 2) help retailers bypass Mastercard and Visa and share in the savings.
This actually makes it worse, since the people who pay with cash are typically poor and homeless who cannot get a credit card, yet the richer folks with rewards cards get cashback while they don't.
Edit: Downvotes why?
The reward level is set by the card issuer and the merchant pays that, too, as part of the interchange fee.
In Australia legislation was passed that enabled merchants to add a surcharge for credit card use. The result was that 'rewards' disappeared from the market.