The Apple Pay And CurrentC Briefing: The Ins And Outs Of Bitcoin’s Newest Competitors

Competition for the digital currency has until now been with legacy payment options such as credit cards and Paypal, those days seemed numbered. Many members of the bitcoin community see these competitors as relics of the past whose technology is comparable to postal mail, with Bitcoin being email.

Bitcoin’s competition has heated up recently with two new challengers. These solutions are new and innovative compared to bitcoin’s previous competition. CurrentC and Apple Pay are aiming to improve the way we buy and sell in the age of the internet.

Apple Pay is a solution for paying in stores and in apps through your smartphone. Apple hopes to simplify and ease the difficult and awkward experience of paying with credit cards. The company is trying to open up a new revenue stream by bringing their attention to detail, seen in past products, to payment processing.

CurrentC on the other hand, is an app created by a group of retail companies tired of the 2% to 3% credit card fees eating up the profits of their small margin businesses. The app has been in development for a number of years and has big names such as CVS, Walmart, and Target behind it.

Both are unique, with their own strengths and weaknesses, and they’re a threat to Bitcoin.

Apple Pay was announced September 9, 2014 and launched this month. Apple hopes to make payments easier and simpler for the consumer. To use Apple Pay, you hover your iPhone 6 over a payment terminal with NFC. The iPhone will pick this up and launch Apple Pay, without having to touch the screen. With Apple Pay already running, it will cue the credit card you set up with the app. To finalize the transaction, you press your finger on the IPhone 6’s Touch ID, a fingerprint scanner. Within seconds, the payment is complete and a notification is sent to your phone detailing the transaction. In addition to the iPhone 6 Apply Pay can be used with an iWatch.

In this video by Verge, they demonstrate how Apple Pay is used in a regular transaction.

Near field communication (NFC) is short distance communication broadcast by a tiny antenna in the phone. It is the mobile payment industry standard for the transmission of payment data. In 2006, the [Nokia 6131](https://en.wikipedia.org/wiki/Nokia_6131) became the first NFC capable phone. Since then it has seen major adoption in the mobile industry, including Google’s very popular operating system, Android. Now the IPhone 6 has been added to the group of NFC adopters, and its using the technology for Apple Pay.

If you are an iTunes user, you can simply add your credit or debit card from your iTunes account. If not, take a picture of your credit card with the iPhone’s iSight camera. Apple will get all the important details of the card from the picture and upload it to your system. In order to verify the credit card, you will need to contact your bank.

Since its launch in October, Apple Pay users have been able to use the app at 220,000 location. McDonald’s, Uber, Whole Foods, Target, and Pandora Food are a few of the major retailers to accept Apple Pay. Airbnb, Starbucks, and Disney, are listed on Apple’s website as retailers looking to accept Apple Pay in the future.

Apples payment alternative is currently available in the US, with Apple recently announcing its intention to bring Apple Pay to other countries, although details on which countries have not been disclosed. People with credit cards processed by US banks have reported that they have been able to use Apple Pay with their American credit cards for services, while outside the United States.

Apple Pay has gotten praise for its ease of use but attracted some heat when it double charged Bank Of America members. Samuel Burke of CNN Money said he enjoyed the experience of paying with Apple Pay until he logged into his Bank Of America account and saw he was charged twice for all the purchases. When users experiencing this issue called Bank of America’s customer support, they were told this problem was on Apple’s end. Apple said it was unable to repay users because, as part of their privacy features, they don’t keep Apple Pay users’ transaction history. Apple did announce that a fix was coming soon but omitted details of when and how the fix would be implemented An apple spokeswoman said, "We’re aware of a Bank of America issue impacting a very small number of Apple Pay users. They’re working on a fix that will be available shortly and reversing any duplicate transactions,”

When Apple announced Apple Pay at the product event in September, privacy and security played big roles in the presentation. Apple Pay doesn’t keep the full history of the transactions made with the service. Apple Pay does store the most recent purchases in its Passport app, the same app that stores the credit card details. Apple Pay makes a point to note that unlike regular credit card transactions, with Apple Pay the cashier doesn’t see your name, card number or security code.

Apple Pay sold the public on its security by explaining that with Find My iPhone, you can turn all payments from for your phone off, if it is lost or stolen. Apple Pay’s security is more complex than that though. Apple Pay’s sensitive data is secured in a special chip called the Secure Element. Credit card information is tokenized, meaning the credit card’s number is replaced with a unique device number, instead of the actual number. This information is encrypted and used in each transaction. The service also creates a unique CVV, credit card security code, for the transaction. Unlike, a normal credit card with a static security code, Apple Pay makes a new one for each transaction. To validate that you are indeed the person who the card belong to, Apple Pay uses their fingerprint analyzer, Secure ID, to validate the transactions.

Apple Pay does not charge users or merchants fees for the service. Many journalists think Apple charges the credit-card issuing banks, since they are the only group left. This may or may not be the case, however they could add fees in the future.

CurrentC is a mobile payment app developed by Merchant Consumer Exchange (MCX) that allows you to pay brick and mortar merchants with your checking account, gift cards, and debit cards. The app also allows you to gain loyalty points, as well as receive exclusive discounts and coupons, which are added automatically. CurrentC is still in private testing but the app has gotten exclusive deals and support from major retailers, such as SouthWest Airlines, CVS, and 7-Eleven. CurrentC is the big retailers bet to take down the 2 to 3% credit card fees they are usually charged.

MXC has been working on mobile payment solutions for several years. The company was incorporated in 2011 and has been silently working away ever since. The company is owned by some of the largest merchants in business. Shell Oil, Target, and Best Buy are some of the biggest. None of the retailers are more interested in the companies’ success than Walmart. Walmart is said to have the most active role in the company’s management and development. Walmart’s former CEO Lee Scott reportedly once said “I don’t know that MCX will succeed, and I don’t care. As long as Visa suffers.”

The project has been underwraps without too much getting out. A public version won’t be released until 2015, but a beta version of the app is currently available on Android and IOS app stores for people with invite codes. Andrew Aude, Stanford graduate and programer, received a code and proceeded to leak his experiences. When you first download the app, it asks you to link your bank account. This allows retailers to avoid paying the steep fees credit card processors charge, the money comes straight out of your checking account. In order to make a transaction, CurrentC scans a QR code the cashier provides. Alternatively, the user can also produce a QR code for the cashier to scan.

The key way CurrentC does transactions differently is how the app uses the Automated Clearing House (ACH) network. ACH is an electronic financial network in the US. Unlike credit card processors, ACH processes transactions in bulk. When you go to a store and pay with an ACH processed transaction, a token is created. That token works as proof that you made the payment. Tokens are batch processed, at a later date. The reason why the big retailer backed mobile payment company is bullish on ACH, is because it is much cheaper than credit card fees. A usual credit card fee is 2.9% with a $0.30 surcharge, where ACH can be as low as just $0.45.

ACH has mostly been used for business to business transactions. The Federal Reserve processes about 60% of interbank ACH transaction and as a result, is the largest ACH transaction processor. The only private-sector ACH transaction processor, Electronic Payments Network (EPN), processes the remaining 40%. In 2012, it was estimated there were 21 billion ACH transactions with a total value of $36.9 trillion.

While the app has not be released yet, many users are already against the app. Readers commenting on the Techcrunch story about CurrentC, said they would not use the app because they do not want retailers to have direct access to their checking accounts. They cited big hacks of Target, Ebay, and other businesses as proof that they could not be trusted. Other concerns were about how the app collected financial, local and even medical information, which would be sharable with 3rd party developers and platforms.

CurrentC has the blessing of the world’s merchant giants and as a result, has a lot of weight to throw around. CVS and Rite Aid have taken away their unofficial support for Apple Pay, making Apple Pay unusable there. In a internal CVS memo, leaked by SlashGear, the company told workers to apologize to the customer, if they try to use Apple Pay on their NFC enabled terminals and “explain that we do not currently accept Apple Pay, but will have our own mobile wallet next year.”

Fierce Retail reported back in 2012, MXC asked retailers to pay fees of $200,000 to $500,000 and sign a three year long mobile payment exclusivity deal. The deal had a one year grace period which is coming up for the numerous retailers who have signed it. One of the main things going for CurrentC is the corporate partnerships it has been able to develop.

Close But No Cigar

Despite issues, Apple Pay is in the wild and gaining market share. It has had some major problems, but that is to be expected for new products. Most importantly, Apple Pay has won over the consumer, as it was designed to. Like most Apple products, it was built for the user. At the same time they made a service that easily fits into the current payment structure (NFC enabled terminals are at every major retailer). They have also been able to leverage their size and brand to get a large group of huge businesses to accept Apple Pay.

“[Apple Pay is] the only mobile payment solution designed around improving the customer experience.”
— – Apple CEO, Tim Cook

What Apple Pay did not plan to solve was the merchant’s experience. Merchants are still charged high credit card processing fees, squeezing the retail business’s small margins. That is a huge problem as brick and mortar businesses continue being threatened more and more by their internet counterparts. Apple Pay also doesn’t solve the users concern about data collection. They, and the big retailers, collect data on users through Apple Pay.

CurrentC plays to the merchant’s experience, focusing on things they value like providing more data to merchants and getting rid of credit card fees. The app would get rid of the fees that credit card charges and instead make each transaction a low flat fee of half a dollar. The app would also give retailers tons of new data, a source of revenue retailers are increasingly reliant on, as their other sources of revenue have started to dry up. The app also has the world’s biggest merchant companies behind the app, giving it some real push.

Nonetheless, many pundits have their doubts that the app will ever catch on. The app seems to have poor execution and development. Besides that, the app has not put an importance on the user’s experience. The app gives big retailers more data about its users, than they would with traditional credit card transactions. These are the same retailers who have suffered massive security breaches in the past. Also, this would only be a solution for big retailers and not the growing demographic of smaller shops, leaving a large market open. Most importantly, the value proposition does not offer anything for the consumers. Especially, when they could go to alternative stores that incorporate a payment system that is built around the consumer.

Both of these apps, leave something to be desired for the two parties involved. The consumer wants ease of use and privacy. The retail giants want to stop being suffocated by credit card fees and expand an increasingly important source of revenue. Both parties’ value propositions need to be satisfied in order for a real solution to emerge. Apple Pay is gaining steam and will likely overcome CurrentC but it will still leave merchants out on the curb. Some merchants are currently willing to bite the bullet in order to win over consumers, but they fear they will not be able to keep the lights on while paying credit card processing fees. It might be down the line, but there will need to be a mobile payment solution that meets both parties’ value propositions.

“[Virtual Currencies] may hold long-term promise, particularly if the innovations promote a faster, more secure and more efficient payment system.”
— – Ben Bernanke, Chairman of the Federal Reserve USA

Sophie is an artist whose secret passion is finance, economics, and technology. Shh! Don’t tell the artists she works with, they hate that kind of stuff. She loves keeping up with the ever expanding and evolving world of crypto-currency. When she isn’t painting, she can be found trying to understand the complex inner workings of markets. Another complex system she is fascinated by, are ecosystems. She often observes them on her daily hikes through nature.