There's been a bit of a tizzy recently after several US retailers dropped support for NFC payments in an effort to thwart Apple Pay, and the nation's largest retailer has chimed in with their own explanation as to why they did so. The retailer is Walmart, and they're the leading force behind the competing CurrentC payment system developed by the Merchant Customer Exchange (MCX). Our own Nick Arnott did some digging into what the CurrentC app transmits and came away unsettled. To recap, CurrentC cuts out the credit card company, instead linking directly into the checking accounts of users and offering a QR code to scan at participating retailers. Apple Pay, meanwhile, uses a combination of NFC, Touch ID authentication, and a tokenized one-time-use card number generator hooked up to the user's credit card accounts to make payments.
Walmart, unsurprisingly, believes that their solution is the better solution:
There are certainly a lot of compelling technologies being developed, which is great for the mobile-commerce industry as a whole. Ultimately, what matters is that consumers have a payment option that is widely accepted, secure, and developed with their best interests in mind. MCX member merchants already collectively serve a majority of Americans every day. MCX's members believe merchants are in the best position to provide a mobile solution because of their deep insights into their customers' shopping and buying experiences.
What this doesn't address is why NFC and Apple Pay had to be turned off. We can surmise that the reason is that Walmart and other MCX retailers see Apple Pay as a serious threat to CurrentC, and want to ensure that it isn't "widely accepted." What's truly laughable is stating that CurrentC is developer with the best interests of customers in mind. It absolutely is not.
While it's true that credit cards aren't also created with the best interests of customers in mind, when coupled with Apple Pay they are markedly more secure than CurrentC could ever hope to be. Here are just a few ways:
- Touch ID authentication ensures that only users authorized at the device level can make payments.
- NFC keeps the transmission distances down to a few inches versus showing a visible QR code.
- Token-generated single-use card numbers ensure that in the event of a retailer breach, the hackers get a card number that's already worthless instead of your real card number
- Accessing your credit card gives users additional spending power versus drawing from a cash account, lets users earn points, miles, or whatever perks are on their favorite cards, and adds a layer of intermediation between a security failure and your money.
There are two other points where CurrentC is hugely beneficial to the retailers. Though setting up and running the system is going to be hugely expensive, it'll cost them less than the billions of dollars they pay annually in credit card fees. But, perhaps more importantly to them, it's a huge data collection operation, allowing a conglomeration of retailers to track your purchasing and spending habits and market even more effectively to you than ever before. They can do that now with just your credit card number (and there's a reason they push store loyalty cards so hard), but Apple Pay's tokenized numbers would absolutely destroy any hope of tracking custom spending for those that opt out of such programs.
It's entirely understandable why Walmart wouldn't want Apple Pay to succeed. But at the same time, it's almost funny to see them asserting that they're offering their customers what they want and need instead of just offering them choice. Shutting off NFC payments to wound Apple Pay isn't about customers — it's about data mining and nothing else.
But will retailers like Walmart and CVS deliberately dropping support for Apple Pay change how and where you shop?
Source: Business Insider