By Patti Murphy
ProScribes Inc.
I've been writing about payments and technology for more than 30 years. Yet rarely have I encountered the subjects of my articles in mainstream media outlets. So I was especially struck by reports that aired recently on local and national news broadcasts regarding mobile POS payments.
The subject of those reports was the decision by certain national retail chains to block acceptance of Apple Pay in favor of a rival, merchant-backed mobile wallet. According to a recent press release, CurrentC is now in "private pilot," with full rollout scheduled for 2015.
Merchant Customer Exchange (MCX), the merchant-backed organization behind CurrentC, has made no secret of its desire to slash the cost of card acceptance by promoting the CurrentC mobile app. Bypassing the card networks, the app will rely on merchant-branded cards that use the automated clearing house (ACH) to clear payments against cardholder's checking accounts (a method sometimes referred to as decoupled debit).
ACH folks have been trying to capture POS market share for decades, with little success. One of the first ACH-based debit card programs was launched in the 1980s by Mobile Oil. The program, which was not heavily marketed, was shelved several years later when Mobile merged with Exxon. Most recently, the retailing giant Target launched a private-label debit card that clears payments through the ACH. Target is also a member of MCX.
It's not just Visa Inc., MasterCard Worldwide and banks that MCX is challenging, either. CurrentC takes an entirely different approach from that used by Apple Inc.'s recently introduced Apple Pay. Instead of using near field communication (NFC) to initiate transactions, for example, CurrentC relies on QR codes generated by customers' smartphones and scanned at the checkout.
Merchants are said to prefer QR codes to NFC because most already are equipped to read QR codes. The Federal Reserve reported that as of 2013, 17 percent of smartphone users had made at least one POS payment using their smartphones. Of those, 39 percent said they did so by scanning QR codes generated by their devices; 14 percent had initiated payments using NFC functionality. More recently, Juniper Research Ltd. predicted 101 million consumers worldwide will make payments using NFC-enabled smartphones in 2014, and 516 million will do so by 2019.
CurrentC (which works with Android phones) is heavily weighted toward potential value-adds, such as advanced marketing tools. It is also designed to track customers' purchases and to store that data as encrypted information. Apple Pay doesn't track or store customer information. Apple made a big deal of that when it launched the iPhone 6 and Apple Pay, and it's a distinction that hasn't been lost on journalists. Consumer privacy is a major concern these days, given the torrent of reports on data breaches.
Meanwhile, at least two members of MCX (CVS and Rite Aid) have blocked acceptance of mobile payments initiated using iPhones. The MCX member roster reads like a who's who of consumer brands: names like Wal-Mart, Sears, Kmart, Lowe's, Bed Bath & Beyond, Best Buy, 7-Eleven, Circle K, Publix, Shell, Southwest Airlines and Wendy's. To date, only CVS and Rite Aid have taken stands against Apple Pay.
"At full scale, CurrentC will be accepted in more than 110,000 merchant locations across the country, giving consumers unmatched access to their favorite retailers. It will also offer innovative features and benefits, such as merchant loyalty programs and instant coupon savings, all stored on the phone," Dekkers Davidson, CEO of MCX, said in a press release. That is, unless it's an iPhone 6, Apple's latest model, which features the Apple Pay mobile app. (Older iPhones should be compatible, several experts have noted.)
I'll admit that I'm not a big fan of Apple. Plus it annoys the heck out of me that Apple is always updating its iTunes software and sending pop-up notices about the need to update, a process that almost always crashes other programs that I have open on my PC. But Apple gets a lot of things right, and it has hundreds of millions of customers who already entrust the company with their credit and debit card information (for iTunes purchases). Demonstrating its popularity, Apple reported selling 10 million of its latest iPhone 6 models in the first two days of sales.
Apple Pay may or may not be superior to CurrentC. But it is available for consumers to use today, so it certainly has at least one leg up on the retailers' initiative. Apple also has plenty of big-name brands on its team. Among them: American Express Co., Bank of America, Capital One Bank, JPMorgan Chase & Co., Wells Fargo & Co., Bloomingdales, Macy's, McDonald's, Walgreens and Whole Foods.
And based on recent press releases, acquirers and processors are racing to support Apple Pay. Danny Chazonoff, Chief Operating Officer at Optimal Payments PLC, pointed to the use of encryption by Apple Pay as a big plus. "Being able to offer Apple Pay supports our strategy of providing merchants and consumers with innovative payment options that reduce friction and provide an enhanced shopping experience, using the most secure payment technologies available," he said.
As I prepared this column, news broke about a breach involving CurrentC. Apparently, hackers were able to access the e-mail addresses of consumers piloting the CurrentC mobile app. This may not be a death knell for CurrentC, but it could hamper overall adoption of mobile payments. A September 2014 survey of consumers by Statista Inc. found that 46 percent of consumers who do not use their smartphones to make payments cite security concerns as the deterrent.
Convenience is another factor. Standing in line at the coffee shop, I know exactly where my debit card is; finding and opening the mobile payment app on my mobile (or any app for that matter) takes more time. I grant it's a generational thing; I'm a baby boomer. But millennials always seem to be talking and texting via smartphone. How convenient will it be for them to pull up their wallet apps? It's issues like these that lead me to believe mobile wallets are not quite ready for prime time. 
Patti Murphy is Senior Editor of The Green Sheet and President of ProScribes Inc. She is also the founder of InsideMicrofinance.com. Email her at patti@greensheet.com.
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