Apple Pay

What CurrentC Didn’t Say

CurrentC made a lot of headlines this week, but not because they meant to. The PR backlash as a result of the decision on the part of CVS and Rite Aid to disable NFC, and therefore Apple Pay, caused the mainstream media and social media channels to light up. Then to make matters worse, yesterday, (Oct. 29), the other shoe dropped as news of a breach surfaced. Those two things together forced the usually tight-lipped CurrentC CEO, Dekkers Davidson, to break his silence about all things CurrentC.

So, in an invitation only press briefing yesterday, Davidson opened up. Sort of. Here’s a recap of what he said (very little) and what we still don’t know (a whole lot).

On The Data Breach

What Davidson Said

The consistent message of the news conference was, yes, there had been a data breach with the company’s E-mail provider that had allowed mainly “dummy accounts” to be compromised.

“Our E-mail provider informed us their system was hacked, exposing some tester E-mail addresses, many of which are dummy accounts.  Importantly, the CurrentC app was not affected.” No card information or SSN numbers were compromised, he said.

What He Didn’t Say

Davidson didn’t mention who its E-mail provider is, or how the unauthorized disclosure of E-mail accounts happened.  The latter matter is “still under investigation” and so Davidson declined to comment past noting that CurrentC takes responsibility for the breach.

Naturally, this is not good news for a retailer consortia which needs to convince potential customers that it is a-ok to turn over your checking account information to a segment of the payments industry that has made the news repeatedly this year for POS hackings.

On CurrentC Security

What Davidson Said

When asked repeatedly if the data breach concerned him or if it would delay the launch of the retailers’ mobile wallet, Davidson was repeatedly very enthusiastic about the secure cloud-based server where all private customer payments data will be stored.

“In terms of payments credentials – they are not stored on the device or in the physical world. They are stored in a secure server on the cloud that was designed to take serial attacks.  It is far more secure that what we have today, and far more secure than what has been advanced over the last several years.”

He also noted that it might be similar to what Apple is offering, and suggested that Apple’s security system could be copying theirs.

“We have a great deal of respect for Apple of course and Apple Pay.  We are actually quite excited that the solution we have chosen has been emulated by others.”

He went on to explain that things have progressed quite well, despite the fact that its been under siege for the last week or so.

“Hacks reminds us that people are motivated to steal information.  Our systems have been attacked repeatedly in the seven days, they’ve withstood far more significant hacks.”

The “far more “significant hacks” refers to the attack that coughed up the dummy E-mail accounts.

What He Didn’t Say

Davidson offered little about how its cloud-based security system will function, other than to note that it might be similar to Apple’s, other than to note that it is so secure that it has withstood a week’s worth of continuous cyber attacks.  It remains to be seen how comfy consumers might feel when presented with the same set of facts. Davidson also did not offer any insight into how Apple could emulate a security protocol that MCX won’t comment on specifically.

Interestingly, Davidson didn’t have much more to say about the apparent difficulties CurrentC  has been having with cybercriminals for the last seven days, other than to note that it is happening, and that is nothing to be concerned about because so far they have repelled all the attacks.

Except that one, but that wasn’t them, it was their E-mail provider.  Even though Davidson did say specifically “It’s on me,” during the course of the news conference

On The Penalties

Aside from security, the majority of the questions focused on the penalties that merchants that had signed on with MCX would allegedly face if they chose to take Apple Pay and bail on CurrentC, thus violating the exclusivity deal they had signed with CurrentC.  The CEO noted that though he was aware of the reports, they were not accurate.

“It’s simply not true, there are no fines.”

Davidson gave some version of that answer 7 times through out the call – as he was asked variations on question by several media outlets.  The New York Times variation, “Are the retail partners of CurrentC free to leave at any time?” elicited this answer

“The merchants of MCX created MCX.  They invested their time, their talent and their money to build a consumer friendly solution.  The merchants of MCX are free to make the best decision for their consumers as they see fit.”

What He Didn’t Say

Davidson didn’t actually say whether the merchants were free to leave, he instead noted (several times through the press conference) that they were free to make the best choice for their consumers.

This may matter because Davidson also declined to answer when asked directly how much the retail investors in MCX had invested – though he did note that the investments of time, treasure and talent hand been “substantial.”

He also did not answer when asked directly by CNN if merchants with NFC terminals who were accepting Apple Pay had to turn them off.  He instead answered, consistently, that merchants “have to make a choice about the consumer experience they want to offer.”

To sum up, it seems clear that currently merchants must choose between accepting CurrentC (when it launches) and Apple Pay.  What the consequences are for choosing to offer Apple Pay are, Davidison didn’t say, other than to note that it is definitely not a penalty.

On Competition

What Davidson Said

Davidson’s position is that just because merchants have sign an exclusivity agreement that prevents them from accepting Apple Pay (and any other mobile payments solution) doesn’t mean that MCX isn’t excited by the rigorous competition with its fellows in the mobile wallet arena.  He noted that they believes they offer the best, most customer friendly services and that “there is absolutely no harm to direct competition.”

He further noted, when asked whether CurrentC would ever allow Apple Pay to be a payment option alongside CurrentC, Davidson thought that a bifurcated mobile wallet space was good and necessary.

I believe in the future that will be entirely possible.  I believe and our merchants believe it will require more than one player to build the ecosystem.” He added: “One simply won’t build the market.”

What He Didn’t Say

When that glorious day of diamond-cuts-diamond capitalism is coming, or even if it is actually coming to CurrentC merchants specifically or to the marketplace in general.  Davidson definitely supports direct competition between the services, he just didn’t want to say when exactly that competition will begin.

It’s just definitely not now.  Since every question about taking Apple Pay was met with a sentence that began with “Merchants have to make a choice,”  clearly there is no room at the POS at MCX retailers for both now.

Actually there isn’t any real consumer choice either since at this moment CurrentC hasn’t launched yet.  And, Davidson offered nothing in the way of a launch date other than to say it would be in “early 2015.”

To sum up, Davidson believes there will and should be direct competition between CurrentC and Apple. Sometime. Later. Whenever.

On Accepting Credit Cards

What Davidson  Said

Davidson noted that CurrentC would be allowing payments cards, of many kinds, including store-branded cards, gift cards, debit cards and credit cards in the CurrentC wallet.  He affirmed this at three different points during the news conference.

However, he also made it clear that at time of launch, those cards would be private label only.

“We have arrangements now with two credit card institutions and the fee structure is largely unchanged. We are not going to discuss the arrangements.  We are in conversations with many large issuers and want to partner with as many large issuers as we can.”

What He Didn’t Say

The details of what that last sentence really means.

Davidson really didn’t have much to say about when, other than to say that it was something they are looking into, with large institutions that they will not name.

Davidson did however note that CurrentC did offer a really good opportunity for issuing banks and retailers to really work together.  But having issuers partner with CurrentC to issue co-branded cards is a whole, whole lot different than having consumers put their Visa-or MasterCard branded cards in their CurrentC wallets.

That prospect seems slim and one, given that one of MCX’s main backers is Walmart, whose former CEO is on record as saying (on the MCX/CurrentC project’s future prospects for being profitable.): “I don’t know that it will (be profitable) and I don’t care. As long as Visa suffers.”

On Interchange Fees

 

What Davidson Said

Davidson says it is not about making Visa suffer  — it is just about making customers happy.

When asked about how avoiding interchange fees plays into the CurrentC strategy, Davidson’s officlal response was “Interchange fees are a tertiary concern.”

That direct comment on interchange fees followed a five minute discussion of how consumers, their experiences and their security were the reasons – the main, overriding and founding reasons – that CurrentC exists.

What He Didn’t Say

Anything else about interchange fees.  They are a tertiary concern. Clearly something that MCX does not think about at all. Hmm. Then something must have dramatically changed since 2012 when that was the rallying cry to getting merchants to join – merchants need a low cost acceptance scheme.

To Sum Up

According to it’s CEO, Davidson Dekkers, CurrentC is a healthy and robust platform that will launch at some point in early 2015 and have “many fabulous features,” that may or may not include loyalty programs and may or may not allow users to use credit cards in the future.

CurrentC will be offered at retailers through out the country who may or may not also be offering Apple Pay, because they may or may not be allowed to do so under the terms of their agreement with MCX.  However, if any of those merchants offer Apple Pay, they won’t be subject to penalties.

MCX houses its data in a totally secure cloud based platform that has been under siege from cyberthieves for the last seven days.  That system may or may not be similar to Apple’s in some way, and it is being tested by an unknown number of consumers and retailers at various undisclosed locations nationwide, where it may or may not be going well.

For more specifics, stay tuned to sometime in early 2015, when CurrentC goes live.  Or not.

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