Diary

When Corporate Titans Slug It Out, You Win

Clash-of-the-Titans-1981

One of the chief benefits of living in a capitalist society is seeing those greedy corporations actually compete for your business.  Every so often, we get to enjoy a true cataclysmic battle between titans of commerce, and the one that’s shaping up between Apple and Walmart is a doozy that could put money in your pocket.

In Apple’s corner, we have the Visa and MasterCard associations, American Express, Bank of America, Capital One, Chase, Barclays, and soon a host of other card issuers.  In Walmart’s corner, there’s a line-up of heavy-hitter retailers, like CVS, Rite-Aid, Best Buy, Circle K, Lowe’s, Sears, ExxonMobil and others.  The battleground:  your wallet and how you pay for everything you buy.

Since 2011, a company called MCX, owned by Walmart and its phalanx of retailers, has been quietly working on a way for retailers to avoid paying the ever-rising fees for accepting credit and debit cards (especially credit cards), and to offer consumers a convenient way to pay at the checkout using mobile technology.  MCX also wants to integrate retailer loyalty cards, rewards, and coupons using their product, CurrentC, which is rolling out a limited trial before a planned 2015 full launch.

Apple rolled out Apple Pay last month.  I’ve used it, and it’s fast and easy as advertised.  Except at Rite-Aid and CVS, MCX members who have disabled their NFC payment terminals to deny Apple Pay users the ability to pay at their locations.  This got everyone’s attention.  The two competing visions of our digital wallet future can’t really survive together in the marketplace.  Just like VHS versus Betamax, they are fundamentally different ways to do the same thing, which look exactly the same on the surface.  Somebody’s got to win.

Rite-Aid and CVS’s actions are the equivalent of raging against the wind and sky.  NFC payments are here to stay.  If they don’t want to accept Apple Pay, they have to come up with a more surgical way to do it (good luck).  What’s to stop Apple from playing tit-for-tat by removing the CurrentC from the iTunes App store, or somehow crippling it on iPhones?  Wars of attrition are ugly affairs, and losing Rite-Aid and CVS is not going to hurt Apple Pay’s adoption, but it does put the spotlight on CurrentC, which is probably the reason they did it.

While some experts dismiss CurrentC, don’t underestimate it.  Walmart rarely invests in losers, and the banks are going to side with whoever makes them money.  To induce you to use CurrentC over your existing payment cards, member retailers are going to give away some pretty nice cash rewards, like Walmart has been doing with their Scan & Go smartphone app.  That translates into money in your pocket.

Now that Apple has solved some of the biggest problems with mobile payments, to be sure, the card issuers are going to fight back, so look for “cardless credit card” accounts soon from Mastercard and VISA, with boosted rewards for checking out with your shiny smartphone.

In the war for your digital wallet, the battle of titans can be a good thing for you.

(crosspost)