One of the persistent issues for mobile payments is the complex nature of the ecosystem needed to support it, ranging from end user smartphones and willingness to use mobile payment apps; retailer and credit or debit card provider support; as well as participation by clearing networks.
With the launch of Apple Pay, we have seen a rather significant degree of retailer conflict with credit card issuers, each backing a different service.
A group of retailers (Merchant Customer Exchange) are creating their own mobile payment system, CurrentC, set to launch in 2015.
Now there are reports MCX members are disabling the near field communications function of their retail checkout systems, to prevent use of Apple Pay, now viewed as a rival system.
The big battle, though, is not between Apple and the retailer consortium, but between the retailers and the credit card and debit card issuers (banks).
Banks and credit card companies have enthusiastically supported Apple Pay, seeing it as a way to increase the number of purchases people make with their credit cards.
Conversely, Apple has struggled to get merchants to join.
On the other hand, not a single bank backs “CurrentC,” the retailer service that intends to cut out use of credit and debit cards, thus saving retailers the card processing fees.
The CurrentC app, when it launches in 2015, will not link the smarpthone apps with a user’s credit card.
Instead, it will withdraw funds directly from a CurrentC user checking account.
CurrentC also plans to support its own retailer gift cards, use of which likewise will avoid payment of the credit or debit card fees.
Gap, Old Navy, 7-Eleven, Best Buy, CVS Pharmacy, Darden Restaurants, HMSHost, Hy-Vee, Kohls, Lowes, Dunkin’ Donuts, Publix Super Markets, Shell Oil, Sunoco, Target, Walmart, Sam’s Club, Sears, Kmart, Bed, Bath & Beyond, Banana Republic, Stop & Shop and Wendy’s say they will support CurrentC.
Apple Pay, on the other hand, has signed up Bloomingdales, Macy’s, Duane Reade, McDonald’s, Sephora, Petco, Panera Bread, Staples, Nike, Walgreens, Subway and Whole Foods.
You can see the problem: the mobile market, already fragmented, is going to get more fragmented. Softcard, the AT&T, Verizon, T-Mobile US consortium and Google Pay already are in the market.
And one cannot help but think Amazon and PayPal could be key contenders as well.
Those tensions within the mobile payments ecosystem have analogies in the video entertainment and mobile communications businesses as well.
Tensions between video distributors (cable TV, satellite TV and telco TV) are not unusual, especially when contract renewals are underway.
In the mobile communications business, device suppliers such as Apple have different business interests than the service providers, while app providers have different business interests from mobile service providers and device suppliers.
That has mobile service providers and many fixed network service providers lining up against network neutrality rules, while many app providers support those rules.
Though all the arguments advanced by all the contestants claim “consumer benefit,” there is substantial business advantage at stake.
That is not to say those arguments are without merit. But there always are private interests that correspond with every public purpose.