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MCX Retailers Risk Fines for Accepting Rival Payments Such as Apple Pay: NYT [u]

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By now we have all heard about U.S. drug store chains CVS and Rite Aid disabling NFC point-of-sale terminals to thwart mobile payment solutions Apple Pay and Google Wallet (which has in turn iOS and Android users now working together).

Why? Because they are part of the MCX group, a consortium of large retailers such as Walmart, Best Buy, Target and more that plan to launch their own payment system called CurrentC in 2015.

Currentc payment

The New York Times now reveals MCX partners are bound to their contracts which state they must not accept rival mobile payment systems or face “steep fines”—hence Rite Aid and CVS disabling their NFC terminals to cut out Apple Pay and Google Wallet:

The problem is that under the terms of their MCX contractual agreement, they are not supposed to accept competing mobile payments products like Apple Pay, according to multiple retailers involved with MCX, who spoke on the condition of anonymity. If these retailers break their contracts, they will face steep fines for doing so, these people said.

The MCX mobile payment solution, CurrentC, would be tied to a users’ bank account and require scanning a QR code from a downloadable app to make a payment. The purpose of CurrentC is to allow large retailers to bypass fees charged by credit card companies which are eating into already low margins. But more importantly, CurrentC would allow retailers have access to customer shopping data, previously held by credit card companies:

CurrentC would also give retailers the ability to track shopping habits across the dozens of stores that belong to MCX, a data set that has traditionally been held by credit card companies, not merchants. If retailers had access to this data, it could be used to deliver relevant deals and loyalty points to consumers, which could increase these companies’ bottom lines.

Payment systems such as Apple Pay use one-time codes when making transactions, which allows user credit card data to stay safe and anonymous. Should a retailer’s system get breached by hackers, those using Apple Pay to make purchases would remain safe, versus vulnerable plastic credit cards. Oh and CurrentC? It’s tied directly to your bank account, so customers would be at the mercy of trusting their info with retailers.

Apple Pay has already surpassed 1 million registered credit cards in its first 72 hours, making it the leading mobile payments system in the U.S., according to credit card companies.

The problem with CurrentC is partners signed onto the service years ago, before Apple Pay or other mobile payments were even in the picture. For the MCX group of retailers, they’ve gone all in on with their archaic QR code-based payment system, despite more safer tokenization-based NFC payment solutions such as Apple Pay and Google Wallet.

CurrentC looks like it’ll be DOA. I can’t imagine people wanting to tie their bank accounts to an app for making payments. The risk is just too great.

Update: CurrentC got hacked and emails stolen. MCX also says companies are free to leave without fines, but when working with MCX, “they choose to do so exclusively.”

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  • 1_andrew_1

    I hope the MCX group also set aside a few dollars to design their own smartphone and app. store, because the chances of Google or Apple letting the MCX app leave beta is pretty much zero at this point.

  • jonezora

    My Iast pay, check was 9500dlr working l2 h0urs a week 0nline, My neighb0ur’s sister has been averaging 15k for months now and she works about 2o hours a week. l can’t beIieve how easy it was 0nce l tried it 0ut

    —————————————————————-

    Here ­­­­­­­­is ­­­­­­­­I ­­­­­­­­­started——- > hulujob.cₒm

    ——————————————————————–

  • alphs22

    Requires direct access to chequing account, uses antiquated QR code. Just terrible.

  • FragilityG4

    Do they really think people would trade the ease and convenience of Apple Pay to scan a couple QR codes? Good luck.

  • Chrome262

    shows you the inefficiency of the system, took them years to come up with it, and still it wont be implemented till 2015. Its already obsolete before it even hits the market.

  • Chrome262

    I can’t see how the FTC will not weigh in on this. Its kind of forcing a lack of competition, but they did sign a contract. I can see some of them suing to get out of it.

  • Al

    “…The problem is that under the terms of their MCX contractual agreement,
    they are not supposed to accept competing mobile payments products like
    Apple Pay, according to multiple retailers involved with MCX, who spoke
    on the condition of anonymity. If these retailers break their contracts,
    they will face steep fines for doing so, these people said…”

    According to the MCX website, this is misinformation. They state that merchants can take whatever payment types they want and that they can stop being associated with MCX whenever they want, without penalty.

    I think CurrentC was doomed before it began, but lets not get caught up in unfounded hysteria over the company itself. There are a ton of retailers signed on to use CurrentC when it comes out. This situation appears to just revolve around the two specific retail chains themselves that are deliberately acting ignorant and childish over this. So, if you really want to cry fowl, focus your energy strictly on RiteAid and CVS for being pricks.

  • Actually, MCX clearly stated it’s an exclusive relationship when retailers join them:

    “When merchants choose to work with MCX, they choose to do so exclusively and we’re proud of the long list of merchants who have partnered with us.”

  • We posted the update in the MCX hacked story: http://www.iphoneincanada.ca/news/apple-pay-rival-currentc-hacked/

    From what I gather, if you sign onto MCX it’s exclusive. The NYT says if you offer CurrentC and a rival payment, you can get fined.

    But if you want to leave MCX, there are no fines to do so.

  • Crosseyedmofo

    oops my bad, was busy laughing that they got hacked i didnt keep reading

  • Al

    It depends how you chose to interpret that. You’ve taken it out of context, and omitted the line that says…

    “MCX merchants make their own decisions about what solutions they want to bring to their customers; the choice is theirs”

    With that, the way I interpret, “…When merchants choose to work with MCX, they choose to do so exclusively…” is that MCX is just bosting that their merchants “choose” not to accept things such as ApplePay and Google Wallet. I don’t interpret that as “merchants have chosen an exclusivity agreement”.

  • Well if that was the case, why would CVS and Rite Aid disable NFC terminals?

  • Al

    I think the questions is… Why are ONLY CVS and Rite Aid disabling NFC terminals, and NOT all the other merchants?

    One can only speculate, but it seems those two are desperate to push CurrentC for some reason. They seem to have an almost religious stance right now. Why just them – is the question.

  • I’m guessing CVS and Rite Aid had new POS terminals installed before Apple Pay was announced and NFC was enabled by default. When they saw people were using the NFC terminal, that’s when they decided to shut it down.

    As for other MCX merchants, I assume they don’t have NFC setup in the first place.

  • Al

    That’s a pretty big assumption. There are a LOT of merchants involved with MCX. Statistically, it seems highly unlikely that none of them have NFC.

  • xxxJDxxx

    Just another corporation trying to monopolize as much as they possibly can.

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