
CurrentC: The Big Retailers’ Clunky Attempt to Kill Apple Pay and Credit Card Fees - ryan_j_naughton
http://techcrunch.com/2014/10/25/currentc/
======
zaroth
This is so bad it makes me angry, so I'm sorry for ranting, but, seriously
WTF? Did Walmart just think, 'Blast those Visa and Mastercard scum with their
excessive fees! Lets create our own eWallet and save that 2%...'

    
    
      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.
    

Wait, what? What do you mean consumers don't want to be on the hook for the
full charges if their phone/wallet is stolen and nobody at Best Buy cared to
check ID on that $10,000 electronics purchase? But sure glad we're saving
those interchange fees though.

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.

~~~
hayksaakian
Here is some perspective: Walmart's margins are approx. 3% according to [1]

\- 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.

[1]
[http://ycharts.com/companies/WMT/profit_margin](http://ycharts.com/companies/WMT/profit_margin)

~~~
TheCoelacanth
It's obvious what retailers get out of it. Credit card fees are a significant
amount of money to them.

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.

~~~
hayksaakian
oh, it's clearly anti-consumer

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.

------
nlh
What a disastrously bad user experience.

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.

~~~
monksy
Why would I care about Apple Pay? I love my credit card. It rewards me for
using it. Besides, if you ever lose or damage your phone, you're screwed.

~~~
kenrikm
Apple Pay is just a wrapper on your credit cards - if you damage or lose your
phone you still have those dinosaur plastic cards to fall back on.

~~~
monksy
Oh ok, well thats kinda convenient. I thought it was trying to go the way of a
phone as credit card approach. Oh well, I'm not invested in the Apple
landscape so I didn't care to learn anything about it.

------
shalmanese
CurrentC has no chance of catching on because it's not CurrentC vs Apple Pay,
it's CurrentC vs legacy credit cards.

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.

~~~
stephen_g
The other thing is that if retailers disable the NFC reader then contactless
cards won't work...

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...

~~~
martingordon
Contactless was a thing here in the US, but at least in my experience, it's
going away. I've had a few credit cards replaced over the past couple of
months (one Chase, one Amex) and while they've gained an EMV chip, they've
also lost contactless functionality (which went by Blink and ExpressPay
respectively).

~~~
stephen_g
That's interesting, because in Australia they're really popular and both EMV
and PayPass/PayWave came in at the same time and use the same chip in the
card. You can actually see the RFID antenna terminating in the EMV chip in one
of my cards which is semi-transparent.

------
coleca
CurrentC is doomed. The premise is that retailers will leverage the ACH rails
to bypass the fees charged by the card brands (MC, Visa, Amex and Discover).

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.

~~~
gst
1) Your bank account number is relatively public anyway - afterall it's
printed on all of your checks.

2) It's relatively easy to reverse an ACH debit. Which protections would I
have to give up?

~~~
nicwolff
It's not hard to reverse an ACH debit _if you notice it within two months_.
After that, it's impossible. (And business accounts only get two days.) Also,
the credit card companies are actively trying to prevent fraud and will notify
you of unusual transactions; with ACH, there's no-one looking out for you but
yourself.

------
martingordon
These guys ask for your Driver's License and Social Security Number during the
on-boarding process:
[https://twitter.com/hasanahmad80/status/526551322523623424/p...](https://twitter.com/hasanahmad80/status/526551322523623424/photo/1)

They say the information isn't stored on your phone like that's a good thing.

------
paul9290
This really pisses me off and makes me not want to shop at the stores involved
and or associated with it! Also, they want me to give them my account number,
Target even???

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.

------
steven2012
The problem with using ACH is that you can't prevent overdrawing your account.
Unless this has the ability to query your bank account and ensure you don't
accidentally overdraw, then using a credit card is far superior. At least you
will get an error message immediately as opposed to a day or two later.

------
aosmith
What a shitshow.. I pitched the same technology around the time bitcoin was
being developed, 2009. I must have talked to the wrong VC's because they
thought ACH over QR was a horrible idea.

Needless to say I've since moved on to bitcoin.

------
sytelus
While CurrentC sucks, it's hard to blame retailers. When you use your credit
cards, _you_ are the one paying that extra 2% for the privilege to use a piece
of plastic because every single merchants simply transfer that cost on to you.
Apple Pay only makes getting rid of whole evil of credit cards harder.

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.

------
drivingmenuts
1\. CurrentC's UX is worse than using a credit card. 2\. CurrentC's UX is
worse than using a debit card (and mis-keying your PIN). 3\. CurrentC's UX is
worse than Apple Pay's UX (near as I can tell). 4\. CurrentC's UX is worse
than using _cash_.

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.

------
SwellJoe
_Former Walmart CEO Lee Scott reportedly once said “I don’t know that MCX will
succeed, and I don’t care. As long as Visa suffers.”_

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.

------
garyrichardson
Canadian here. We have NFC built into our CC's already. I look forward to our
neighbours to the south getting the same technology.

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.

------
T-A
Reading this, I am reminded of
[http://shouldiuseaqrcode.com/](http://shouldiuseaqrcode.com/)

------
allanjenn
does anyone care to help retailers save 3%? and, do they know the money still
comes out of a credit card company and that they can change their rules
whenever they want? no wonder why it isn't a startup but a bunch of mad
corporations

------
ntakasaki
Apple Pay charges 0.15% and the credit cards 2 to 3%. If the costs were really
revealed to the consumers, I wonder how many of them will opt for the
convenience versus entering a PIN with a debit card, use a check or pay cash.

~~~
RockyMcNuts
Well, if you shop for it, a cardholder can get a minimum of 1% rebated back to
them, more in cases of special promotions.

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.

~~~
dingaling
> Well, if you shop for it, a cardholder can get a minimum of 1% rebated back
> to them, more in cases of special promotions.

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.

~~~
saryant
Merchants can offer cash discounts in the US. Few do and credit card rewards
are the strongest they've ever been. 2% on everything is easy, bigger
discounts are available if you work for it.

------
chx
There's an advantage here people don't think of: credit cards are, in their
current form, a danger to society. It encourages people to spend money they
don't have and creates debt that doesn't create new value. You could say that
credit cards raise consumption and so on but at the end of the day the
interest actually decreases your consumption ability.

