Retailers Disabling Mobile Payments, and That's Bad News for Credit Cards

[yfan]

So, retailers don't want to pay those pesky credit card fees. So they have developed their own "mobile payment" system, which would scan a QR code on your phone which will be directly linked to your bank account. In anticipation, major retailers like Walmart and CVS are disabling NFC terminals, which effectively disables Apple Pay. Google Wallet and other NFC based payment systems.

After all, I'm sure retailers who constantly have your credit card data breached can be totally trusted with your bank account for which you do not enjoy the protections of a credit card...

http://www.theverge.com/2014/10/25/7069863/retailers-are-disabling-nfc-readers-to-shut-out-apple-pay

Something tells me retailers won't win this battle (at least I hope not).

[mongstradamus]

yes this is pretty bad news for customers.  Lets see how hard apple will push back about their apple pay. I am wondering what their options would be, not sell any apple prodcuts with in walmart stores or something like that. 

Another thing to note how unsecure scanning qr code would be , and i really have no trust in retailers when it comes to privacy with all the hacks that have happened recently. 

[Anonymous]

I don't use debit cards often due to safety concerns. I doubt I'd be willing to use a payment system that directly takes money out of my checking account at a store terminal. Maybe if they can convince me that it is safe. I like credit cards because I can dispute purchases. We'll have to see how everything turns out. 

[yfan]

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@Anonymous wrote:

I don't use debit cards often due to safety concerns. I doubt I'd be willing to use a payment system that directly takes money out of my checking account at a store terminal. Maybe if they can convince me that it is safe. I like credit cards because I can dispute purchases. We'll have to see how everything turns out. 

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That's exactly why I use credit cards. The rewards, good as they are, are just a bonus - it's the security of using a credit card knowing that I am not liable for fraudulant charges, nor will I be out a bunch of cash while the banks investigate.

[Anonymous]

Thanks for the info.

[Anonymous]

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@Anonymous wrote:

I don't use debit cards often due to safety concerns. I doubt I'd be willing to use a payment system that directly takes money out of my checking account at a store terminal. Maybe if they can convince me that it is safe. I like credit cards because I can dispute purchases. We'll have to see how everything turns out. 

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 I get that Wal Mart wants to save money on card fees, but it's hard to convince someone to connect their checking account, where they have no flexibility to carry a balance and none of the protections and benefits of a credit card. Even if that wasn't a problem, the system is based on QR codes so they can lock out other NFC based payment systems, which is a decision that is bad for consumers. It's potentially less secure and not as convenient as Apple Pay, Softcard, or Google Wallet. As Apple said when they introduced Apple Pay, competitors are only focused on profits. Apple seems to be trying to make a platform which provides a good experience to attract and lock in device customers, not to make the most transaction fees possible. This group with the QR system is trying to save on fees at the expense of security and customer convenience.

[yfan]

Well, Apple is pretty focused on profits too, and they didn't exactly invent NFC payments. But there's nothing wrong with private companies focusing on profit. The problem is when their persuit for profit begins to threaten the consumers' data security, and the consumers' right to choose the payment forms that work the best for us. Retailers may not like paying the swipe fees, but the truth is that much of their business exists thanks to the convenience of credit cards. Consumers buy more with credit cards (not that this is necessarily a good thing, but it's fact), and frankly, because of cards, retailers get to do with fewer checkout staff - or even automated checkout counters. Imagine if everyone was paying with cash or writing a check - it would hold up lines and retailers would have to hire additional cashiers to keep the crowd moving. If they want o prevent NFC, they are shooting themselves in the foot.

[Anonymous]

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@yfan wrote:

Well, Apple is pretty focused on profits too, and they didn't exactly invent NFC payments. But there's nothing wrong with private companies focusing on profit. The problem is when their persuit for profit begins to threaten the consumers' data security, and the consumers' right to choose the payment forms that work the best for us. Retailers may not like paying the swipe fees, but the truth is that much of their business exists thanks to the convenience of credit cards. Consumers buy more with credit cards (not that this is necessarily a good thing, but it's fact), and frankly, because of cards, retailers get to do with fewer checkout staff - or even automated checkout counters. Imagine if everyone was paying with cash or writing a check - it would hold up lines and retailers would have to hire additional cashiers to keep the crowd moving. If they want o prevent NFC, they are shooting themselves in the foot.

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What I mean is that they seem to be using Apple Pay to attract and retain customers and make their money that way. Apple makes a lot more more money off of device sales then they do from the App Store or iTunes. Apple Pay seems like it will be like those services, adding value, but not being a profit center. If CurrentC is going to work, they need to use something like NFC and move away from the checking account model. Apple is also pushing privacy and security as a selling point for this, so we'll probably see some sort of response to that in future versions of Google Wallet. Obviously, mag stripe cards are the way of the past and EMV is more of a holdover until something different becomes popular. I think that's NFC. NFC is cross platform and very convenient.

[AeroKrix]

 Next thing you know, banks want to make more profit off of CurrectC! ACH fees sounds like another money maker for banks. Something like a certain limit is free but over 20 ACH transactions in one statement cycle will cost the customer. Retailers want to save money, the banks typical response....charge the customers more fees. This is exactly what happened when retailers won their case for debit fees and banks had to cap the fee at like 25 cents and banks responded by charging monthly maintenance fees. In then end, CurrentC does not bode well for the customer. Let's not forget the fact that you have hand over your account information to a consortium created by a group of retailers not known for top notch security. Also, using CurrectC allows retailers to collect customer data on purchases, location, and health data(I don't understand why health data) just so companies can market to you and who knows what else they want to do with your information. 

[yfan]

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@AeroKrix wrote:

This is exactly what happened when retailers won their case for debit fees and banks had to cap the fee at like 25 cents and banks responded by charging monthly maintenance fees.

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Which promptly went up in flames from consumer protest and a move to move to smaller banks and credit unions. The only thing banks got out of that is a PR nightmare. There will always be banks that won't charge the fees, and consumers smart enough to find them (just like we do with credit cards here). But the reason I don't want to pay with my bank account isn't that I'm afraid of the fees, it's that I don't want retailers to be able to reach into my bank account given their record of data security AND I don't want to lose the zero liability protections of using a credit card.

I have no problem with systematically lowering swipe fees, even if that means less "rewards" if it helps lower some prices even a little bit. Europe seems to be doing fine with pretty strict fee regulation - and everyone on these boards is swooning over how great Chip-and-PIN is because Europe has them.

The problem here isn't one of banks, but of retailers. I don't think consumers will simply give up the benefit of credit cards (especially the zero liability and payment flexibility) just because retailers want to own the mobile payment market. People will vote with their dollars and go where it's most convenient for them. Which means a universal standard, and right now NFC is that universal standard as far as mobile payments are concerned. What I'd be interested in knowing is if mobile payments actually cost retailers a higher fee than swiping (or reading the chip of) a card.