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The Verge has buried the lede here: major retailers are banding together to compete with Apple Pay, with their own system made out of QR codes and direct access

The Verge has buried the lede here: major retailers are banding together to compete with Apple Pay, with their own system made out of QR codes and direct access to your checking account. Given the security track record of US retail the past few years, one might wonder what could possibly go wrong.

malandrew 12y ago
Security from credit cards isn't really any better, it's just that they established very strong fraud detection mechanisms and have accepted eating the losses from credit card theft as a cost of doing business. When I lose my credit card and someone starts using it to make purchases, so long as I notify my issuer promptly, they absolve me of being responsible for the fraudulent transactions. So long as this new system accepts that this is a cost of doing business and implements a customer service policy where the risk is spread among all retail participants, this would be competitive with the status quo. These merchants aren't going to get out of paying fees, but they should be able to reduce those fees to the cost of providing a competitive service to the credit cards. The benefit is that they won't have to also pay higher fees than necessary to get the benefit of the system. If they provide this basic safety feature, than upgrading security will be a given since it will reduce a major cost on their balance sheet, which is dealing with fraudulent transactions.
- canjobear 12y ago
  > So long as this new system accepts that this is a cost of doing business and implements a customer service policy where the risk is spread among all retail participants, this would be competitive with the status quo. If they do this, then essentially the retailers would be setting up a credit card company of their own. But why would we expect their fees to be lower than the fees from the existing credit card companies?
- infinite8s 12y ago
  The credit card servicers aren't eating the losses - they offload these onto the merchants. So retailers are already eating the risk while also paying fees.
  - Istof 12y ago
    The customer end up paying for it anyway you look at it but at least the credit card insurance comes with it.
  - MBCook 12y ago
    They're also getting the benefit of easy and quick payment. If a big chain tried to go cash and check only, how well do you think that would go over? Even if they included debit cards, my guess is it would be a big problem. I bet shareholders would revolt. The only reason they may get away with this is Apple Pay isn't established yet so there is no perceived 'loss'. Another commenter was right that if Apple pay impacts their growth numbers they may be forced to reconsider.
- pzxc 12y ago
  Au contraire - security from credit cards IS better than the proposed competition from the retailers, which avoid CC fees by deducting your payment directly from your bank account. Credit card security is better simply because it doesn't take your money directly -- the charge is added to a credit account that you then pay (or not pay if you dispute it). While debit cards / bank accounts offer the same protection as credit cards, in that you have 0% liability for fraudulent/unauthorized charges, it still can take a period of time in order to "get your money back" after your account has been drained. That can pose serious problems if you are depending on that money to pay rent and other bills. Thus, the effective security of credit cards is in fact higher, because you are not parted from your money while you are waiting for the dispute resolution.
- eddieroger 12y ago
  Sorry to pile on the "you're wrong" argument, but the existing replies don't address the distinction between ApplePay and CurrentC, and yes, ApplePay is more secure. CurrentC provides a central point of failure (and attack, for that matter), since they hold all the account details in their system. Contrast that with ApplePay, which doesn't even use the actual credit card number for the transaction, but instead a device-specific, remotely wipeable, single-origin system. ApplePay is definitely more secure, and I will actively seek out retailers who let me use ApplePay and avoid those that use CurrentC.
  - jonahx 12y ago
    Why wouldn't you just shop where you want and use a credit card wherever ApplePay isn't supported?
    - eddieroger 12y ago
      Voting with my dollars. Retailers who have success with ApplePay will make no secret about it, and those that aren't using it have to compare their YoY numbers to the published ones of those using ApplePay. Using my credit card as normal doesn't send that message. Not that my spending alone is enough to sway an industry, but if enough people vote with their dollars, the message gets sent.
      - jonahx 12y ago
        I guess I was really asking why you, as a consumer, care if a retailer supports ApplePay? Is the checkout experience that much better in your eyes vs an ordinary credit card? Or do you like the added security? Or something else?
        eddieroger 12y ago
        All of the above. I don't like carrying my wallet, but I always have my phone, so being able to use it in place of my wallet is something I want. I love the added security - I shopped at each of the major retailers to have a breach in the last year, and got a new debit card issued each time, which is a huge pain the ass. And, in general, it pushes the industry forward, which is good for everyone. If ApplePay gains traction, so will Google Wallet, and Windows Phone will have the road paved to offer NFC-payments.
downandout 12y ago
Given the anti-competitive nature of this move, combined with the massive market power of those involved, I think the DOJ might take some action here. "Let's band together to crush our competitors and ensure the success of our own product" is generally illegal under US law. As a consumer, this is actually pretty upsetting, and I would be in favor of legal action. This doesn't just affect Apple Pay - it affects all contactless payments. I quite often use(d) my contactless debit card at CVS. All of this to promote a payment system that literally has a 0% chance of success. As noted in the parent comment, given the history of major retailer data breaches, no one in their right mind is giving these people their checking account information. It's just not going to happen.
- atmosx 12y ago
  > All of this to promote a payment system that literally has a 0% chance of success. I don't think so. If retailers choose to not support a system then the system itself is kinda doom because this system was made for retailers. The current payment systems are becoming obsolete at a fast pace (faster than I thought anyway). Cryptocurrencies, large chains of retailers rolling up their own payment system, etc. Just a small comment on security: Most banks suffer serious hacks that you and I never know about it, for obvious reasons. So don't be so sure that banking systems are more secure than retailers.
  - downandout 12y ago
    >I don't think so. If retailers choose to not support a system then the system itself is kinda doom because this system was made for retailers. I disagree. I think people will just wind up using their standard cards if given no alternatives that are viewed as safe by most people. >Most banks suffer serious hacks that you and I never know about it, for obvious reasons. So don't be so sure that banking systems are more secure than retailers. True, but regardless, the banks have won the PR war here. For consumer products, that's really all that matters. When it comes to widespread consumer trust, perception is reality.
- sbierwagen 12y ago
  If the DOJ gave a damn about monopolies, you'd figure they would have broken up the credit card cartel, or Apple itself

malandrew 12y ago

Security from credit cards isn't really any better, it's just that they established very strong fraud detection mechanisms and have accepted eating the losses from credit card theft as a cost of doing business. When I lose my credit card and someone starts using it to make purchases, so long as I notify my issuer promptly, they absolve me of being responsible for the fraudulent transactions. So long as this new system accepts that this is a cost of doing business and implements a customer service policy where the risk is spread among all retail participants, this would be competitive with the status quo. These merchants aren't going to get out of paying fees, but they should be able to reduce those fees to the cost of providing a competitive service to the credit cards. The benefit is that they won't have to also pay higher fees than necessary to get the benefit of the system. If they provide this basic safety feature, than upgrading security will be a given since it will reduce a major cost on their balance sheet, which is dealing with fraudulent transactions.

canjobear 12y ago
> So long as this new system accepts that this is a cost of doing business and implements a customer service policy where the risk is spread among all retail participants, this would be competitive with the status quo. If they do this, then essentially the retailers would be setting up a credit card company of their own. But why would we expect their fees to be lower than the fees from the existing credit card companies?
infinite8s 12y ago
The credit card servicers aren't eating the losses - they offload these onto the merchants. So retailers are already eating the risk while also paying fees.
- Istof 12y ago
  The customer end up paying for it anyway you look at it but at least the credit card insurance comes with it.
- MBCook 12y ago
  They're also getting the benefit of easy and quick payment. If a big chain tried to go cash and check only, how well do you think that would go over? Even if they included debit cards, my guess is it would be a big problem. I bet shareholders would revolt. The only reason they may get away with this is Apple Pay isn't established yet so there is no perceived 'loss'. Another commenter was right that if Apple pay impacts their growth numbers they may be forced to reconsider.
pzxc 12y ago
Au contraire - security from credit cards IS better than the proposed competition from the retailers, which avoid CC fees by deducting your payment directly from your bank account. Credit card security is better simply because it doesn't take your money directly -- the charge is added to a credit account that you then pay (or not pay if you dispute it). While debit cards / bank accounts offer the same protection as credit cards, in that you have 0% liability for fraudulent/unauthorized charges, it still can take a period of time in order to "get your money back" after your account has been drained. That can pose serious problems if you are depending on that money to pay rent and other bills. Thus, the effective security of credit cards is in fact higher, because you are not parted from your money while you are waiting for the dispute resolution.
eddieroger 12y ago
Sorry to pile on the "you're wrong" argument, but the existing replies don't address the distinction between ApplePay and CurrentC, and yes, ApplePay is more secure. CurrentC provides a central point of failure (and attack, for that matter), since they hold all the account details in their system. Contrast that with ApplePay, which doesn't even use the actual credit card number for the transaction, but instead a device-specific, remotely wipeable, single-origin system. ApplePay is definitely more secure, and I will actively seek out retailers who let me use ApplePay and avoid those that use CurrentC.
- jonahx 12y ago
  Why wouldn't you just shop where you want and use a credit card wherever ApplePay isn't supported?
  - eddieroger 12y ago
    Voting with my dollars. Retailers who have success with ApplePay will make no secret about it, and those that aren't using it have to compare their YoY numbers to the published ones of those using ApplePay. Using my credit card as normal doesn't send that message. Not that my spending alone is enough to sway an industry, but if enough people vote with their dollars, the message gets sent.
    - jonahx 12y ago
      I guess I was really asking why you, as a consumer, care if a retailer supports ApplePay? Is the checkout experience that much better in your eyes vs an ordinary credit card? Or do you like the added security? Or something else?
      - eddieroger 12y ago
        All of the above. I don't like carrying my wallet, but I always have my phone, so being able to use it in place of my wallet is something I want. I love the added security - I shopped at each of the major retailers to have a breach in the last year, and got a new debit card issued each time, which is a huge pain the ass. And, in general, it pushes the industry forward, which is good for everyone. If ApplePay gains traction, so will Google Wallet, and Windows Phone will have the road paved to offer NFC-payments.

downandout 12y ago

Given the anti-competitive nature of this move, combined with the massive market power of those involved, I think the DOJ might take some action here. "Let's band together to crush our competitors and ensure the success of our own product" is generally illegal under US law. As a consumer, this is actually pretty upsetting, and I would be in favor of legal action. This doesn't just affect Apple Pay - it affects all contactless payments. I quite often use(d) my contactless debit card at CVS. All of this to promote a payment system that literally has a 0% chance of success. As noted in the parent comment, given the history of major retailer data breaches, no one in their right mind is giving these people their checking account information. It's just not going to happen.

atmosx 12y ago
> All of this to promote a payment system that literally has a 0% chance of success. I don't think so. If retailers choose to not support a system then the system itself is kinda doom because this system was made for retailers. The current payment systems are becoming obsolete at a fast pace (faster than I thought anyway). Cryptocurrencies, large chains of retailers rolling up their own payment system, etc. Just a small comment on security: Most banks suffer serious hacks that you and I never know about it, for obvious reasons. So don't be so sure that banking systems are more secure than retailers.
- downandout 12y ago
  >I don't think so. If retailers choose to not support a system then the system itself is kinda doom because this system was made for retailers. I disagree. I think people will just wind up using their standard cards if given no alternatives that are viewed as safe by most people. >Most banks suffer serious hacks that you and I never know about it, for obvious reasons. So don't be so sure that banking systems are more secure than retailers. True, but regardless, the banks have won the PR war here. For consumer products, that's really all that matters. When it comes to widespread consumer trust, perception is reality.
sbierwagen 12y ago
If the DOJ gave a damn about monopolies, you'd figure they would have broken up the credit card cartel, or Apple itself