Apple Pay was introduced just 10 days ago, but one thing is becoming very apparent: Apple Pay is far superior to CurrentC, the planned payment system run by a multi-billion dollar consortium of retailers known as MCX.
Both Apple Pay and CurrentC are payment systems that allow consumers to pay for goods and services at brick and mortar retailers as well as online using a smartphone. That is just about where the similarities end.
Apple Pay was introduced on October 20, and in little over a week, it has become the most popular mobile payment system available. There were over one million signups in the first 72 hours. Users of an iPhone 6 or iPhone 6 Plus take a picture of their debit or credit card, enabling the phone to pay for transactions at over 200,000 terminals around the nation.
The card number is erased from the phone once entered and replaced with a number that only makes sense to the credit card company when used with TouchID. Consumers first verify their identity through TouchID fingerprint identification that unlocks the phone, and then hold the phone near the terminal. The phone and terminal talk thru a radio communication system called NFC (Near Field Communications) which only broadcast a few inches.
The phone uses a system called tokenization and assigns a one-time use number to the transaction and sends that to the terminal. The payment terminal communicates with the credit card company using that number, and if the credit card company accepts that number, then the retailer is sent the money for the transaction. The actual credit card number is never revealed. The whole payment process takes less than five seconds.
In the first 10 days, the system seems to be working well. Approximately 90% of transactions at terminals that have been designated as Apple Pay terminals have been completed on the first attempt.
CurrentC is another mobile payment system. It allows consumers to register only a bank account with their mobile phone and then use the phone to pay at supporting retailers. CurrentC is in testing and due out in October 2015. Apparently, CurrentC uses an odd system of generating QR codes on your phone for a payment and then scans that in at the register. CurrentC has not mentioned any other security features associated with its system.
Why has a Mobile Payment War begun between these two systems?
The simple answer is money. If retailers can create their own system and bypass the transaction fees for credit cards, they could potentially save 2%-3% on each sale. In retail, 2%-3% additional profit would be a huge windfall.
Here are 10 reasons Apple Pay will ultimately succeed over CurrentC:
1. Apple Pay does not track user data, but CurrentC does. CurrentC wants to track everything about the transaction: what you are buying, how you’re paying for it, and when the purchase took place. That is a little too creepy for most people.
2. Apple Pay does not store direct access to your bank account, CurrentC might. It is not known what CurrentC will do with your bank account information. Apple Pay sees your credit card number once and then deletes it. Even then, if something happened with a credit card number, the consumer would be protected by the credit card company’s fraud provision.
3. Apple Pay does not use a clunky QR code system like CurrentC. QR codes are a nightmare. Opening the proper app, keying in the information, generating the QR code, and scanning the code may take a consumer well over a minute. That doesn’t even include what the merchant has to do. That seems to be a lot of extra steps. Can you imagine a grandmother trying to do all that versus just touching her finger to a phone and being done?
4. Apple Pay can use credit cards and debit cards, CurrentC just uses your bank account. Consumers should be able to choose how they want to pay for a transaction, whether it is with their bank account through debit cards or by credit card. Apple Pay allows for both of those options. CurrentC only allows you to use your bank account.
5. Apple Pay with Touch ID verifies your identity, CurrentC is having trouble with verification. This may be the biggest difference. Touch ID will not let anybody else use your phone to pay for something. Analysts are not sure what CurrentC has for security features, but an ID system has not been mentioned and their record on security already has a black eye: the CurrentC system was hacked this week and had users’ private information stolen. CurrentC’s press release says that customers’ bank account information will be stored in a “secured cloud”. Consumers will not be happy with this. They don’t want their information stored with a payment service or retail chain where it can be part of a massive data breach. Too many of these breaches have taken place at Target, Home Depot, Staples, etc. If CurrentC were to store your bank account numbers, a breach into this system would be much worse. With Apple Pay, neither the smartphone nor the merchant has your credit card number. If a hacker gets into the Apple Pay system, the information he finds will be useless. Apple Pay will eliminate the type of breaches consumers have experienced this year. CurrentC could magnify it many times over by giving the crooks access to your bank account numbers.
6. Apple Pay has tokenization, it is unknown what CurrentC has. Once again, not much is known about CurrentC. But if they are just depending on the QR codes to help the transactions secure, that is not an adequate level of security.
7. Apple Pay can be disabled in 60 seconds if your phone is lost, CurrentC likely takes more time. Apple Pay has a tight operating system, allowing you to disable your iPhone and Apple Pay very quickly. Since CurrentC will be scattered across different types of phones and systems, disabling the system may take significantly more time.
8. Apple Pay is proven technology with NFC already in stores, CurrentC is still in testing. The technology used by Apple Pay in terminals has been tested and has worked fairly seamlessly during the first ten days of use. It is unknown what is required with CurrentC and the QR readers.
9. Apple Pay user experience is positive, CurrentC is not at this time. There has been a very positive response to Apple Pay. A number of Beta testers for CurrentC have reported a clunky interface that still needs work.
10. Apple will use the leverage of its massive customer base to demand big retailers offer Apple Pay. CurrentC does not have this avid following.
This may all be a moot point. Retailers will probably need to create a solution that allows both systems to operate at the point of sale. This will all be about consumer choice. In the end, retailers may try to force CurrentC on the consumer, but consumers will prefer–and demand–Apple Pay.
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