By John Gruber
Square Reader SDK lets you use Square hardware to take payments in your app.
Earlier this week, pharmacy chain Rite Aid shut down unofficial support for the Apple Pay and Google Wallet mobile payments systems, resulting in an outcry from users who have been testing out Apple’s new system since its launch on Monday. Rite Aid was not an official Apple Pay partner, but the payments system generally works with existing near field communications (NFC) payment terminals anyway, and many users had had success using Apple Pay at Rite Aid stores early in the week.
It now appears that fellow major pharmacy chain CVS is following suit and as of today is shutting down the NFC functionality of its payment terminals entirely, a move presumably intended to thwart Apple Pay. Google Wallet services are obviously also being affected by the move.
These retailers are part of a group (Merchant Customer Exchange, “MCX”) working on an upcoming mobile payment system called CurrentC. Here’s an article about CurrentC by Debbie Simurda, writing for Mainstreet Inc., a point-of-sale provider:
CurrentC mobile payments platform by Merchant Customer Exchange (MCX) is a mobile wallet being developed by a group of major retailers who want greater control of payments, their mobile brand and mobile customer experience. They want to keep more of their customer data, rather than ceding to technology companies. MCX was established in 2012 and currently consists of 59 participating retailers, many large Tier 1 merchants, across all segments. […]
[Update: Not sure why, but Mainstreet Inc. took down the original article. I’m now linking to Google’s cached version of it.]
Here’s how it’s supposed to work:
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.
CurrentC doesn’t support the contactless Near Field Communications (NFC) used by Apple Pay.
QR codes. Good luck with that. Plus, CurrentC doesn’t even work with credit cards — it only works with prepaid store cards and debit cards tied directly to your bank account. Apple Pay is built atop the credit card system; CurrentC is a (futile, I say) attempt to eliminate credit card.
What Apple gets and what no one else in the industry does is that using your mobile device for payments will only work if it’s far easier and better than using a credit card. With CurrentC, you’ll have to unlock your phone, launch their app, point your camera at a QR code, and wait. With Apple Pay, you just take out your phone and put your thumb on the Touch ID sensor.
Tim Cook was exactly right on stage last month when he introduced Apple Pay: it’s the only mobile payment solution designed around improving the customer experience. CurrentC is designed around the collection of customer data and the ability to offer coupons and other junk. Here is what a printed receipt from CVS looks like. It looks like a joke, but that’s for real. And that’s the sort of experience they want to bring to mobile payments.
If I’m reading this right, and I think I am, these retailers who are shutting down their NFC payment systems are validating that Apple Pay is actually working, that people are actually using it. And remember, it only works with the month-old iPhones 6. Think about what happens a year or two from now when a majority of iPhones in use are Apple Pay enabled.
Think about what they’re doing. They’re turning off NFC payment systems — the whole thing — only because people were actually using them with Apple Pay. Apple Pay works so well that it even works with non-partner systems. These things have been installed for years and so few people used them, apparently, that these retailers would rather block everyone than allow Apple Pay to continue working. I can’t imagine a better validation of Apple Pay’s appeal.
And the reason they don’t want to allow Apple Pay is because Apple Pay doesn’t give them any personal information about the customer. It’s not about security — Apple Pay is far more secure than any credit/debit card system in the U.S. It’s not about money — Apple’s tiny slice of the transaction comes from the banks, not the merchants. It’s about data.
They’re doing this so they can pursue a system that is less secure (third-party apps don’t have access to the secure element where Apple Pay stores your credit card data, for one thing), less convenient (QR codes?), and not private.
I don’t know that CVS and Rite Aid disabling Apple Pay out of spite is going to drive customers to switch pharmacies (Walgreens is an Apple Pay partner), but I do know that CurrentC is unlikely to ever gain any traction whatsoever.