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BirdsEye View

apple pay vs currentc: fin techs answer to tyson-spinks

The following is written by Sean Ryan, a contributor to BankSlate on SNL:

 We seem to have reached the point where everything there is to be said regarding Apple Pay has been said, but not everyone has said it.

So allow me to be one of what Homer Simpson described as “the people who saw an overcrowded marketplace and said ‘Me too!’”

The angle I’m most interested in now is the Apple Pay – CurrentC rivalry.  

Well, rivalry may not be quite the right term, unless your idea of a rivalry is best exemplified by the Harlem Globetrotters and Washington Generals, or maybe grizzly bears and salmon.

They are superficially similar, but actually could not be more different. It’s like the difference between Rob Lowe, and Super Creepy Rob Lowe.

Apple Pay seems like a classic Steve Jobs-era Apple innovation, wherein they both developed a simple, intuitive service for consumers and then managed to cajole enough people in other industries to allow it to function as designed.

CurrentC seems like its designers were so busy tailoring it to address large merchants’ complaints about the card-based payments, that none of them ever bothered to ask why a consumer would ever be motivated to use it.

Under the current, credit card dominated system, as with Apple Pay, if I go to the store and pay for my purchase with my American Express card, the merchant pays a comparatively stiff interchange fee, but AmEx rebates around 1% of that fee back to me via rewards, which I can take in any number of forms. And if my preferred form happens to be first class seats on international flights, I might be getting more than a nickel of value per point. And if my account information is somehow compromised, my exposure is sharply limited.

With CurrentC, merchants save themselves the cost of interchange by using ACH transactions tied to my bank account. It’s not clear what kind of real rewards I’m going to get, since the whole point of the effort is to recapture the interchange fee that American Express and I are currently sharing. And if my bank account information is somehow compromised, my exposure seems to be a lot less limited.

Looked at like that, MCX’s dreams of getting me to use CurrentC are like the pie-in-the-sky trade ideas proffered by sports radio callers, wherein it is imagined that other teams may be induced to part with an all-star in exchange for a large volume of back-ups, has-beens and draft busts, preferably all with albatross contracts.

"Hey Mike, long time listener, first time caller. The Yankees really need a dependable starter, so I say they should trade Alex Rodriguez, Austin Romine, Zoilo Almonte, the rights to Brien Taylor and a bucket of balls for Madison Bumgarner."

Which *would* be a great trade for the Yankees. So great, that there’s no conceivable way, even in an infinite number of iterations in an infinite number of universes, that the San Francisco Giants would willingly take the other side of it.

So it seems with CurrentC.  

There were lots of digital music players on the market before Apple entered the fray, but none was as user-friendly as the iPod, which took digital music players from a niche to mass adoption.

Apple has done something similar with Apple Pay, while CurrentC looks to be coming to market with the equivalent of a Zune.

And that was pretty clear even before CurrentC got hacked. Granted, Apple (and its cloud customers) have recently been the victims of a much higher profile hack. But then, people who take naughty photos of themselves and store them on someone else’s servers are, if not the authors of their own misfortune, at least the ghost writers. Apple Pay seems extremely secure.

Even if the folks at MCX aren’t fully aware of what a one-sided fight they’ve got on their hands, you might expect that some of the merchant partners would see the writing on the wall.

Yet last weekend, pharmacy chains CVS and Rite Aid both disabled Apple Pay functionality in their stores. The intent seems to be to channel upscale, iPhone-toting early adopters into CurrentC, although I would wager that the primary effect will be to channel upscale, iPhone-toting early adopters into Walgreens.

What could they possibly have been thinking? 

As fate would have it, through sources I am not at liberty to divulge, I have located a recording of the CVS executive meeting at which the decision to block Apple Pay was made. 

Partial transcript:

Mr. Stratton: I think that this situation absolutely requires a really futile and stupid gesture be done on somebody's part. 

Mr. Blutarsky: And we’re just the guys to do it.

I put the over/under on the drug chains welcoming Apple Pay back with open arms at six months.