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> One is a full EMV track read transaction and the other is not. I don't see how that can be true; loading a card into Apple Pay is done via photo or manually,
by aaronem 12y ago
> One is a full EMV track read transaction and the other is not.
I don't see how that can be true; loading a card into Apple Pay is done via photo or manually, neither of which entails a swipe of the card through something like a Square reader, which is what would be necessary for Apple Pay to provide "full EMV track read" data. The information available via Apple Pay is therefore necessarily a proper subset of that encoded into the magstripe, which, according to the Visa rep's statement, should require that Apple Pay transactions be billed under the same card-not-present fee scheme as in-app purchases and online transactions.
Your argument from packet format is irrelevant; "user interaction points" don't enter into it, under the rules defined and promulgated by the card associations. Those rules include a distinction between card-present and card-not-present transactions, made on the basis of whether or not the transaction data includes a full and valid magstripe read. Apple Pay transactions cannot include such a read, because, based on the methods by which a card can be enrolled in Apple Pay by its user, the information available at transaction time cannot be other than a proper subset of what a magstripe read would provide.
It's understandable that WalMart's Cook should be cross over this; his irritation stems from the perception that "the fix is in" between Apple and the card associations, such that they're breaking their own rules to give preferential treatment to Apple Pay.
On the other hand, these are their rules; the conditions under which various transaction fee schemes apply are defined entirely by the card associations (Visa and MasterCard, et al.), and if they want to extend preferential treatment in this fashion, then it's entirely within their scope to do so.
In effect, the rule for a card-present transaction has been extended with a clause "...or if it's done by Apple Pay". This is a special case of a more general rule under which effectively all card association operations occur, and whose most concise formulation is "Because we say so."
- wfjackson 12y ago>On the other hand, these are their rules; the conditions under which various transaction fee schemes apply are defined entirely by the card associations (Visa and MasterCard, et al.), and if they want to extend preferential treatment in this fashion, then it's entirely within their scope to do so. And how is what Walmart accepts for payment in their own stores is not under Walmart's own scope?
- aaronem 12y agoWell, sure it is. But if Wal-Mart wants to use the card associations' infrastructure, then Wal-Mart has to play by the card associations' rules. The whole point of "CurrentC", as I understand it, is to launch and build out a competing infrastructure which bypasses the card associations entirely, most especially their transaction fee schedules. I can understand why merchants would want to do that; from the association perspective, there is absolutely no reason to do anything other than putting the entire cost of the transaction on the merchant, because asking the customer to pay into the scheme is a disincentive for using plastic at all -- which means that, from the merchant perspective, accepting plastic entails taking a bath on the transaction fees in exchange for not losing all the customers who won't do business at a cash-only till. Which, these days, is most of them, exclusive of special cases like a farmer's market or a flea market, where everybody expects to pay cash -- though, thanks to Square, Stripe, and friends, even that's changing. (This, were you wondering, is the genesis both of the "credit card minimum $10" signs you see at shoestring gas stations, and the rule in the associations' merchant agreements which prohibits merchants from setting such minima. The sign comes about because transaction fees often mean a merchant loses money on very small credit card transactions, and the rule follows because merchants setting such minima costs the associations part of the fee income which they consider their due.) It makes good sense, then, for merchants, especially big merchants like Wal-Mart who pay the associations more than anyone, to band together and try to launch a competitor to the existing scheme. Of course, it would help if they could show signs of being able to mount a serious challenge, and so far such signs are sorely lacking, which might explain some of the bitterness evident in Cook's mien on the subject. Like it or not, though, the card associations are the 800-pound gorilla in the field; counting their predecessor organizations, they've spent over half a century establishing themselves, and to expect them to be anything other than fiercely protective of such investment would be foolish. I'm not sure whether the people making decisions under the "MCX" banner have failed to recognize the scope of what they're trying to do, or whether they've simply failed to execute on a level sufficient to mount a credible challenge -- but, either way, they haven't done anything worth taking seriously, and I doubt they ever will. This leaves them with the same choice they've had for decades now: whether to go on paying a vig to the card associations, or instead to stop taking plastic and lose all the customers such a decision will entail. Sucks, sure, but, as ever, mere pissing and moaning changes nothing.
- evanspa 12y agoWhen you provision a card to Apple Pay by taking a photo of your card or entering the info manually, what happens next is that the iPhone makes a call to the card network (Visa/MC/Amex) to verify the card data (the card network will also make a call to the issuing bank of the card for a validity check), and if all is well, the network will return the same information that is effectively provisioned to physical ICC chips that you see in newer credit/debit cards. These parameters are stored in the iPhone 6's secure element, and allow the iPhone to perform full EMV transactions (as apposed to simply just EMV Legacy MSD transactions).