Wednesday, October 29, 2014

10.30.14 KA-CHING


This article originally appeared in the 10.30.14 issue of Metroland.

When Apple rolled out the iPhone 6 a couple of weeks ago, most of us were too busy running around yelling about the atrocity of having the new U2 album rammed down our throats to notice a really important development:  the introduction of Apple Pay, a mobile payment app that comes with the iPhone 6.

            Perhaps we didn’t pay attention because it’s fairly mundane and obvious:  Apple has partnered with a bunch of credit card companies, and now you can pay for stuff at participating retailers by simply waiving your phone in front of a reader.  It’s something we all could see coming a mile away—in fact, it’s already been around a couple of years with a cellular carrier-backed mobile payment app for Android users that until recently had the unfortunate name of Isis, but which has been renamed Softcard.  And there’s also Google Wallet. 

            But because this is Apple, Apple Pay feels like a tipping point.  It’s safe to go in the water now.  The future is here, etc.  The seamless app is also fairly secure—the retailer doesn’t get your credit card number or even your identity, so you don’t need to worry about data breaches, at least at the store level.  And since the app is activated by fingerprint-sensor Touch ID, you don’t have to worry about someone absconding with your phone and running up your credit cards, unless they also abscond with your finger.

            It looked like Apple had gotten past the U2 debacle and Apple Pay was catching fire, when the CVS and Rite Aid drugstore chains bluntly announced that they would not be accepting Apple Pay.  The deal is that a bunch of retail chains, including not only CVS and Rite Aid but also Wal-Mart, Best Buy and Target, have been busy cooking up their own mobile-pay app, something called CurrentC.  CurrentC will bypass credit card companies and take money straight out of customer bank accounts.  This means gazillions of dollars to the retailers, who have long complained about credit card fees reaming their profits.  CurrentC will also track consumer habits across all participating retail stores, giving way to an uber-database of individual and mass shopping behavior.  Unlike the other payment systems, which use “near-field” contactless communications, CurrentC will rely on scanning QR Codes, those ugly little bar-codey things that were ubiquitous a few years ago, adopted by all kinds of business trying to be so with-it and modern, that hardly anyone ever actually used.  Oh, good luck with that.

            The initial reaction was damning, with commentators blaming the greedy drugstores for undermining consumer choice and what’s left of consumer privacy.  Then it was disclosed that these chains were contractually bound to use CurrentC exclusively, that when they all signed on several years ago to help develop the service, they all agreed not to allow competing technologies at their check-outs, and agreed to pay heavy fines if they did.  Which is a really stupid thing to agree to, given the rate of change of technology and the tendency for innovation to produce new, unforeseen solutions to old problems.

            So here we are right now, with a weird kind of stalemate, with all these big retailers unwilling to allow the super-hot Apple Pay app while waiting for their own CurrentC app to land, which isn’t supposed to happen until sometime next year.

            I have a hard time choosing sides here.  On one hand, rooting for Apple Pay necessarily involves rooting for the credit card companies, and who wants to do that?  They’re usurious and ugly corporations that hopefully will soon get bitcoined out of existence.  On the other hand, do we really want Big Retail to be able to track all of your shopping habits?  (I’m not sure about this one; I like getting tailored info about deals on things I actually buy)  More importantly maybe, do we really want Big Retail, which has had near-constant issues keeping confidential consumer information secret, to have a direct portal into our bank accounts?

            I suspect that the Big Retail players will get together and agree to let Apple Pay and whatever other mobile-pay technologies come in and compete with CurrentC.  To do otherwise will get people PO’d, and might even be illegal.  I’m no expert on anti-trust law, but something about allowing one payment system and barring all the rest doesn’t smell right.  Apparently all these systems are designed to flow through the same back-bone and use generally the same hardware, so this isn’t a tech problem so much as a business problem.

            Let the gloves come off so we can shop the way we want.  C’mon, this is America for crying out loud.


Paul C. Rapp, Esq. is an often casually-dressed woodsman lawyer specializing in IP law who typically doesn’t go out shopping for anything other than food, power tools and bourbon.

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