Blocking Apple Pay Is A Terrible Strategy For CurrentC Merch
Source: Tony Bradley
There is apparently a battle brewing between Apple’s new contactless Apple Pay system, and a service called CurrentC, which is supported by a coalition of major retailers. CVS and Rite Aid Rite disabled the NFC capabilities on point-of-sale systems specifically to block customers from using Apple Pay―part of an effort to force customers to embrace a different emerging mobile payment system: CurrentC.
CurrentC is from Merchant Customer Exchange (MCX), a merchant-backed coalition that includes CVS, Rite Aid, Walmart, Best Buy, Lowe’s, Target, and other household names. CurrentC strives to bypass the major credit cards entirely―and avoid the associated processing fees, while also enabling the member retailers to closely track purchase habits and history, and integrate with merchant loyalty card programs.
Apple Pay takes a polar opposite approach. Apple partnered directly with the major banks, and credit card providers―Visa, Mastercard, American Express. The partners in the Apple Pay system account for more than 80 percent of credit card purchases made in the United States according to Apple.
What’s really at the heart of the battle, though, isn’t the credit card processing fees―it’s your personal information and privacy. Although it would be significant if retailers could minimize or eliminate the credit card processing costs, the major divide between Apple Pay and CurrentC is that Apple Pay is completely anonymous, and doesn’t allow the merchants to link purchase history to specific customers. The domino-effect of the Apple Pay privacy is that it breaks the model the retail chains use for customer loyalty programs.
In response to the news that CurrentC members were actively blocking Apple Pay, Apple CEO Tim Cook stated, “Merchants have different objectives sometimes. But in the long arc of time, you only are relevant as a retailer or merchant if your customers love you.”
I agree. Why not accept both?
I understand the motivation behind wanting to track customer purchase history, and the ability to target customers with loyalty discounts and coupons. That makes sense. But, don’t try to force users to participate in CurrentC by actively blocking other options. That doesn’t make sense.
I already favor Walgreens over CVS, and HEB over Kroger specifically to avoid the “customer loyalty discounts”. Walgreens does also offer a loyalty card program, but it is not tied as closely as the CVS program to what you pay at the register. I don’t want to participate in your loyalty program, and if that means I don’t get your “discounts” then I just won’t shop at your stores. The reality is that the prices at competing stores are often as good or better―without the extortion of the customer loyalty program―so your “discount” is really just a bribe to get customers to enroll in your loyalty program in exchange for buying products at normal, reasonable prices.
I already avoid Walmart and Best Buy like they’re active Ebola quarantine sites, so there’s no love lost there. I am a fan of Target, but if Target wants to block Apple Pay in an effort to force participation in CurrentC, I can find somewhere else to shop. Amazon won’t accept Apple Pay, but I can shop in my pajamas and the stuff just shows up at my door two days later thanks to Amazon Prime.
Personally, I don’t even really mind the privacy aspect of it. I am OK having my shopping activity tracked and monitored. I am, however, opposed to requiring participation in the loyalty program in exchange for “discounts” that just bring the price down to where it should be in the first place. That’s just extortion.
It is all a tradeoff. I understand that. There are millions of customers who are more than willing to have their purchasing history and habits tracked in exchange for earning discounts, or receiving coupons that are targeted for the things they buy most often. Great. So, merchants like CVS, Rite Aid, Walmart, Lowes, Best Buy, and Target should continue to offer customer loyalty programs, and to participate in and promote the CurrentC mobile payment system.
There are also customers who are not interested in customer loyalty programs―whether for privacy reasons, or just the principle of the thing. The CurrentC merchants should not be so arrogant, or short-sighted to assume all of their potential customers will embrace CurrentC. They still need to accept other forms of payment like cash and actual plastic credit cards…and Apple Pay.
It would be one thing if the retail outlets lacked the technology to accept Apple Pay, and the merchants simply chose not to invest in upgrading point-of-sale systems to accommodate iPhone users. But, that is not the case―at least not for CVS and Rite Aid. These retailers have the ability to accept Apple Pay, and are actively rejecting it. That is a horrible strategy that will backfire, and give Apple Pay customers incentive to shop elsewhere.
MCX defended the move by CVS and Rite Aid�Cexplaining that CurrentC requires exclusivity from its member merchants. Apparently, MCX is not confident that its payment system can hold its own in a competitive market. CurrentC merchants need to leave it up to the customers. If the CurrentC system is any good, customers will choose it over Apple Pay, and it will be able to compete on its own. And, if MCX requires exclusivity, the merchants should fight to amend that agreement, or abandon MCX in favor of providing the best customer experience for all customers.
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