Payment Wars: How Merchants And Carriers Are Trying To Block Payment Systems They Can't Track

from the dangeorus dept

Over the weekend, it came out that two giant pharmacy chains, Rite Aid and CVS, had started blocking Apple Pay, the massively hyped new payment system from Apple that has received much praise for its ease of use. The product had worked for about a week before the two companies started blocking such near field communication (NFC) payments (which also takes out other NFC payment options like Google Wallet). While Rite Aid gave a vague and slightly ridiculous explanation — that it is “still in the process of evaluating our mobile payment options” — pretty much everyone knows the truth. A bunch of retailers, led by Walmart, have been creating their own mobile payment system called CurrentC, which cuts out the credit card companies. But, it also builds in all the tracking and spying features of store loyalty cards, expanded across all merchant partners. Apple Pay lets people remain anonymous.

In short: CurrentC lets merchants (1) cut out credit card transaction fees and (2) get more and more data on shoppers. No wonder they want to block out other options.

But this isn’t the start of such fights. Last year, mobile carriers like T-Mobile, Verizon and AT&T sought to block Google Wallet in favor of a similar consortium of mobile operators, looking to create their own NFC payment system, which was unfortunately named ISIS until world events led the consortium to change its name to Softcard.

All of these moves should be concerning. They’re clearly not being done with the consumer in mind. Nearly everyone who’s played with Apple Pay has agreed that the system is a huge leap ahead for mobile payments in terms of ease of use. Instead, we’re seeing giant organizations looking to team up to keep competitors out of the market. At the very least, this should raise serious antitrust issues. But it also demonstrates, in a different sphere, why net neutrality is such a concern. When you have large companies that can effectively collude to block or kill certain powerful and useful apps and services, it hinders and blocks important innovations, leaving consumers significantly worse off. Not only are they left with fewer choices and lower quality apps and services, but it also pushes consumers into services — like CurrentC — that take away their privacy.

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Companies: apple, at&t, cvs, google, rite aid, softcard, t-mobile, verizon

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Comments on “Payment Wars: How Merchants And Carriers Are Trying To Block Payment Systems They Can't Track”

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79 Comments
JBDragonsays:

Re: Re:

Apple Pay works with any NFC terminal already. What standard do you want? Google Wallet still works. Apple Pay is much better. Apple does get a cut. It’s a TINY cut of like .005% that they get of of the transaction fee that’s already charged. In fact I here that transaction fee is lower then a Credit card because of the much better security!!! Just so you know how Apple Pay works to Google Wallet and a Credit Card, here you go!

http://appleinsider.com/articles/14/10/20/how-apple-designed-apple-pay-to-avoid-the-pitfalls-of-traditional-payment-systems

Ninjasays:

Re: Re: Re:

Interesting info, thanks.

My credit card website can generate graphics that detail my consumption by groups (ie: food, fuel, clothing etc). Walmart & Co would be able to further split it in very specific items which is VERY worrying. Apple would still see where I spent money but not the specific items so it’s less problematic. I would use their system because it is no different from my current card (hopefully G Wallet adds such functionality and comes to my country!). Of course I’ll never willingly own an Apple device…

Anonymoussays:

Re: Re: Re: Re:

Most credit card terminals are going to be/have been replaced to allow for the required use of Chip based cards in October 2015 by MasterCard. I mostly see really new terminals where I shop these days. Giant, Target, Home Depot and Seven Eleven all have updated recently. The stick in this equation is that merchants who do not upgrade will be liable for fraudulent charges since they do not have the most current security. After eating a fraudulent charge or two small vendors will update their hardware. http://blogs.wsj.com/corporate-intelligence/2014/02/06/october-2015-the-end-of-the-swipe-and-sign-credit-card/

Many of the manufacturers are throwing in NFC to these terminals to make them more desirable to all merchants. Better to have an extra feature in all the boxes that can be turned on than not to have it all.

Michael Longsays:

Re: Re:

I’m glad you added the “As far as I know” qualifier to your statement.

The tokenization system used by Apple isn’t a proprietary system.

Tokenization is handled, in part, by the Visa Token Service for Visa and the MasterCard Digital Enablement Service for MC. Amex has a similar service. While different in name, the AMCV (Amex, MC, and Visa) systems are in fact standardized, and together they’ve proposed a common framework to the industry.?

Apple Pay is built on this standard.

So much for assumptions….

Chronno S. Triggersays:

Re: Re:

Think about how it would have to work for Apple to never see what amount of money is going where. All transactions would have to go directly threw the phone, but no one would trust that since it could easily be hacked.

It has to work much like a current credit card works. Your account balance isn’t stored on the card, just an identifying number that the retailer uses to contact a central server. If that central server is Apple, then they can see everything you do down to the specific store location.

If there is anything marked “Account history”, then that data can be monitored.

Probably still better then the CurrentC and SoftCard thing. With those the controller can not only see how much you spent where, but what on spread across many stores.

JBDragonsays:

Re: Re: Re:

Apple knows NOTHING of what’s going on when you use Apple pay. That’s the whole point!!! unlike Google Wallet who’s the Middle man, When you buy something with Apple Pay, Your phone sends a 1 time use Token, that goes directly to the bank that issued you your credit card and Decrypted there at that point.
Apple is completely clueless. This link explains in better detail how a Credit Card works along with Google Wallet and Apple Pay.

http://appleinsider.com/articles/14/10/20/how-apple-designed-apple-pay-to-avoid-the-pitfalls-of-traditional-payment-systems

Michael Longsays:

Re: Re: Re:

Actually, it does go through (not threw) the phone. A token representing your credit card number is stored on the phone in the secure enclave. iOS doesn’t have access to the number, it can only tell the enclave to include it in an NFC transaction along with a seemingly random security code.

Breaking NFC encrypting and capturing the token doesn’t do you any good. The security code is one time use, and the token is also tied to a specific device so it can’t be used on another phone.

Oh, and the token comes from your bank, not from Apple.

Apple Pay, unlike Google Wallet and CurrentC, also works without an internet connection. The only communication made is passing the authorization token to the payment terminal via NFC.

It would be nice if people bothered to learn how something works before setting up a straw man “it has to work this way” argument they can then proceed to knock down.

Eldakkasays:

Re: Re: Re: Re:

While the one-time security code may prevent someone ‘stealing’ your number, it doesn’t protect privacy or prevent tracking.

The token is not 1-time, (at least according to that article linked by that douche a dozen times http://appleinsider.com/articles/14/10/20/how-apple-designed-apple-pay-to-avoid-the-pitfalls-of- traditional-payment-systems).

Therefor the retailer will get a pattern of spending, because customer 5639(1 purchased a tooth-brush on Monday at the supermarket. On Tuesday they purchased some condoms at the supermarket. on Wednesday they purchased some flowers at the florist who’s owned by the same company that owns the supermarket, later that same day they purchased a super vibrating extreme speed dildo at the sex shop chain also owned by the same parent company. The following Monday they went back to the sex shop seeking a refund of the defective dildo, which required them to provide their name, address and telephone number as well as ‘waving’ the NFC device over the sensor to authorise the refund to Apple Pay.

Now mega-corp AllKnowingMart knows who customer 5639(1 is and can link all of their purchases to that person.

The token itself should also be encrypted (using a different key each time) so that the retailer can’t build up a database of purchases.

JBDragonsays:

Re: Re: Re:

Same with using a Debit Card. There’s zero fraud protection on them unlike a Credit Card that is protected under law. CurrentC is linking directly to your Bank Account where you also have ZERO fraud protection. Just do a Google search for Paypal issues as they do the same thing. It gets worse. I hear the CurrentC App grabs your health info!!! Man do I hope this fails. I have no plans to use it.

JBDragonsays:

Re:

No, you’re completely WRONG! Apple Pay is completely different form anything having to do with iTunes or the iTunes store. Unlike Google Wallet where When you use it, you are paying Google with the Credit Card they have on file for you and then Google pays the Merchant, with Apple Pay, The transaction goes directly to the Bank that issued you your card and the Token is Decrypted at that point. Apple has ZERO Idea where you used it, How much or on what. That’s the whole point.

In fact this Link explains it better on how a Credit Card, Apple pay and Google Wallet works.

http://appleinsider.com/articles/14/10/20/how-apple-designed-apple-pay-to-avoid-the-pitfalls-of-traditional-payment-systems

Anonymous Anonymous Cowardsays:

Always use cash...but

I always use cash, except at the ATM or when buying online. One grocery store kept trying to push their loyalty card on me, and I kept telling the clerks that I did not want to be identified. One clerk then picked up a card off their counter and handed it to me (not related to me in any way). I don’t know if the card was there for that purpose or had been left behind by someone.

I am waiting for the day when some retailer tells me they no longer accept cash, and apparently even though it specifically states on the paper bills that “THIS NOTE IS LEGAL TENDER FOR ALL DEBTS PUBLIC AND PRIVATE” they could actually do this (some court case I heard about quite a while ago).

pixelpusher220says:

Re: Always use cash...but

Most cashiers will happily use their code for your purchases. They get the ‘points’, you get the discount and the tracking company gets fairly confused.

Or just enter Jenny’s phone number. (xxx)-867-5309 If it isn’t registered in every area code already I’d be very surprised.

In my case, I had it tied to my phone number, then didn’t use them for 3-4 years. Viola, my number has been reassigned to someone else so I just enter what used to be my phone number and give whoever has it the ‘points’.

John Fendersonsays:

Re: Always use cash...but

Those affinity cards are a scam, and I avoid stores that use them to the greatest extent that I can. Using the cards doesn’t actually save you any money because the stores have jacked their “non club” prices up and you have to use a card to get the same price you’d get at a store that doesn’t use them. Screw those guys.

When I do go to such stores, though, I refuse to play along on principle. I won’t use any of the usual tricks (bogus phone #s, etc.) Nonetheless, about half the time the clerk will just scan a card they keep for people like me and act like they’re doing me some big favor.

I find the whole thing very irritating.

Anonymoussays:

Re: Always use cash...but

“I am waiting for the day when some retailer tells me they no longer accept cash, and apparently even though it specifically states on the paper bills that “THIS NOTE IS LEGAL TENDER FOR ALL DEBTS PUBLIC AND PRIVATE” they could actually do this (some court case I heard about quite a while ago).”

First thing that came to my mind was the Larry Flynt movie. Paid his 10K fine with 1 dollar bills carried by two strippers at least in the movie.

JBDragonsays:

Re: Privacy?

Really? Another Clueless person. You have no idea How Apple Pay works. Apple is not tracking anything because they can’t. That’s the whole point. Google does with Google Wallet because when you use that service, You’re actually paying Google and then Google makes the payment on your behalf. Which makes sense, since that’s all part of Google’s Business model on how they make money.

It really is completely Anonymous when you use Apple pay, even from Apple themselves!!! Here’s a link that much better explains How a Credit Card works along with Google Wallet and Apple pay.

Anonymoussays:

Re: Re: Re: Re: Re: Privacy?

Wow, way to make assumptions. I am in disbelief, not because they are Apple, but because a large corporation would not try to grab consumer data. Especially in this day and time of corporations and governments hoovering up all the data they can get.

But this is a teachable moment for you. Never make assumptions about people’s beliefs and motives with such little information on them.

Anonymoussays:

Re: Re: Privacy?

Really? Another Clueless person. You have no idea How Apple Pay works

And why should I trust Apple? Before there was Apple, Jobs was screwing Woz outta cash. Outside of Apple Jobs was denying Lisa was his daughter to avoid paying for his daughter. The statements about Apple ][, The Newton, the agreement violations with Apple Records, the agreements with the Mac Clones, the ‘screw Motorola’ position, et al.

Why should I trust Apple is looking out for me as a consumer in any way?? As one Apple CEO stated ‘looking to maximize shareholder value’ – that is done on the backs of the consumer typically.

Apple is not tracking anything because they can’t.

Because there has been an end-to-end code audit by parties that are trustworthy?

JBDragonsays:

Re: All about the trust

Here’s how Credit Cards, Google Wallet and Apple Pay work. Yes Apple Pay can be TRUSTED!!!

http://appleinsider.com/articles/14/10/20/how-apple-designed-apple-pay-to-avoid-the-pitfalls-of-traditional-payment-systems

AS for CurrentC. Not only is it all about tracking your Spending habits. But to get the cheaper service, they have to link Directly to your Bank Account. While you have Fraud protection when your Credit Card, You have ZERO with your Debit only card, let alone your direct Bank account. I also hear CurrentC links up and grabs your health info also.

Besides all the hassle of turning on your phone and unlocking it, finding and loading the App, just so you can scan a QR code or you scan a QR code. It can go either way. I don’t know who in their right mind would use it.

jimsays:

Re: Re: All about the trust

Right, now tell me about the tooth fairy? Please, unless you controlled the code, tell me again how bad actors get into operations again. All NFC communications is hackable. You manually have to turn off all NFC, even apple realizes that. How long till they publish the first update? I’m betting less the one month. But don’t expect a public report of why it was done. Just a massive push update.

z!says:

About using cash- it’s legal tender for -debts-, but you only own money to the store if they’ve already given you the merchandise. No merch. changes hands, no debt exists. (If the restaurant lets you eat before paying, there’s a debt; if they want payment up front, there isn’t.)

BTW, long time back, I’d give the RadioShack clerks the address “1600 South Beach St, Fort Worth, TX”, which was Tandy’s corporate headquarters. Only 1 in 10 clerks recognized it, an they just chuckled.

John Fendersonsays:

Re:

“No merch. changes hands, no debt exists.”

I think you’re overanalyzing this. For the purposes of currency, “debts” includes buying stuff in the way you describe.

But something that people often misunderstand is that there is no law that requires anyone to accept cash, whether for money owed or for on-the-spot purchases. There are a number of stores that simply don’t accept cash at all.

John Fendersonsays:

Re: Re: Re:

A business can absolutely price things in US dollars if they accept US dollars. But those dollars don’t have to be in the form of cash. The business I saw that didn’t accept cash took payment in US dollars in the form of electronic transfer (credit or debit cards).

The federal reserve has a web page about this. There is no legal obligation for any private entity to accept cash, period. They don’t have to tell you up front, even.

Manabisays:

What gets me about CurrentC is how stupid it is

And not only the privacy implications, have you looked at how CurrentC works? The terminal will display a QR code, then you have to run the CurrentC app on your smartphone, and let it use the camera to scan the QR code to pay. WTF? This is going to be so inconvenient I doubt it’ll get very much usage at all. I know I wouldn’t even consider trying it.

JBDragonsays:

Re: What gets me about CurrentC is how stupid it is

Not only that, but it links Directly to your Bank Account!!!! This is how they get around to having lower fee’s. Of course unlike a Credit Card, where you’re protected by law against fraud. There’s none of that if you use a Debit Card only, or Direct access to your bank account. Target or Home Depot or the others can get hacked again, and money stolen out of your account. and good luck getting it back if you’re lucky, in any case waiting weeks. Paypal already does thing, Do some Google Searches and see how that’s working out!!!

I also hear that it’s Grabbing your health info also!!! Talking about really taking things to far.

Apple Pay is a Snap. This whole CurrectC is a hassle. Better off to just use a Credit Card at that point.

Anonymoussays:

It’s hilarious to see several links about how Apple Pay is great all from the same single source and one that has a vested interest in taking Apple’s word at face value. Now I know nothing about how Apple Pay works on a technical level nor do I even have a device capable of using that feature, but here is a second opinion:

http://agbeat.com/tech-news/just-secure-apple-pay/

Michael Longsays:

Re:

That has to be the stupidest article I’ve ever seen. If a woman leaves her purse behind with a bunch of credit cards in it… SHE’S ALREADY LOST THE CARDS!

Further, you just need to jot down the numbers to steal them. The phone’s not needed at all.

But since you seem to think that they’re equally insecure, let’s try this. We both go to a seedy bar. You leave your wallet with credit cards behind, and I’ll leave my Apple Pay-enabled Touch ID protected iPhone behind.

We then wait to see whose card numbers get stolen first, and whose appear second (if at all).

Alien Rebelsays:

Re: Re: CASH IS KING

You’re welcome. I’m actually just recovering from a shock yesterday, of browsing a list of ways hackers can gain access to just about anything. Some marvelous advice went along with that list- “don’t keep any money, anywhere, in any form, that you aren’t willing to risk losing.” I suppose they meant to say “online” or “electronically” but then what other choices are there?

I’m leaving now to go look up how to raise chickens.

Indysays:

AntiTrust?

How is this antitrust at all?

Just use other vendors if you don’t like them. People do this millions of times a day.

Joey uses AMEX because of the benefits inherent within. Hotel Z doesn’t take AMEX, so Joey goes elsewhere.

Billy doesn’t like paying cash at the food carts, as they charge extra money to do so. He takes his business elsewhere.

Sammy is a penny pincher, and values his spending privacy, so he takes out $300/week to buy food and groceries. He can shop pretty much anywhere, but has to deal with change, having the cash on hand, etc.

All provide some advantages, and some disadvantages. Nothing about CurrenC says antitrust. Nothing about Apple Pay says it’s any better than cash for people that don’t want an iPhone.

Anonymoussays:

Re: Merchants

I wonder what hell individual (think small business) merchants are going through

That is why some businesses say Cash only or one place I know says cash/debit – no credit cards.

Most of this is gonna get wrapped up in a black-box terminal that the small guy pays a cut to a “payment processor” to deal with.

Anonymous Anonymous Cowardsays:

Re: Re: Merchants

Part of the issue used to be the cost to the merchant. Visa/Mastercard was one price, around 2.5% (if I remember correctly), and Amex was 6% (again, if I remember correctly). This is why many merchants do/did not accept Amex.

I am curious about what the deal for these types of payments are, and what the differences between providers might be, along with, how long till the merchant gets the money. Credit card reimbursement used to take a month or more. That is an additional cost to the merchant, as money costs money.

Anonymoussays:

change its name to Softcard

You guys seriously did not just use WorldNetDaily as a source, did you? I mean, you do realize what WND is, right? That website often makes Rush Limbaugh look pleasant with the utterly vile and vitriolic hatred it spews. This is the very website that most strongly pushed the birther movement and still pushes the idea that Obama is a Kenyan Muslim Communist, among other hateful racist and bigoted crap.

Please, ffs Mike, do not cite WND. Wtf, dude?

Anonymoussays:

Prediction CurrentC will collapse

The problem is that the members of CurrentC are locked in to not accepting anything else for three years starting roughly in 2012. When that time is up the flood gates open to NFC solutions and CurrentC will be quietly put out of it’s misery in 2017.

A big Holiday Data breach in any of the larger members may hasten the end.

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