Hi Kelly, If merchants are telling you they are paying 4% merchant fees than they are either looking for sympathy or they are trying to justify their prices which in the end of course always are setup to make allowances for these expenses. Anyhow, they also may need to review their card provider's fee structure with their provider. I am in Canada, but somehow can't see how fees in the US should be double. I own a retail business and while I don't want to disclose my annual sales volume, I can say that it is of course definitely less than that of a 2-restaurant business in Chicago and less than that of a large retailer in a large city. Card fees of course should be less for these businesses with such a much higher sales volume since a provider would be interested in giving the best possible fee to prevent the customer from going to a competitor.
Having said all this, my merchant base fee for Visa and Mastercard is 1.6% and while there are a few additional charges if the card used is a premium card which offers the card holder points or cash back, in total the fee is still only around 2% or 2.1% with the exception being American Express which does charge a high 3.5% fee, but very few people here use American Express compared to Visa or even Mastercard. This is of course still a lot more expensive than excepting a debit/bank card payment which costs me 5 Cents per transaction no matter whether it's a $2 or a $2,000 transaction. Fortunately, a lot of customers here in Canada do like to use their debit cards because they can't over-spend and when it comes down to it, the merchant fee I pay is just part of the cost of doing business and it is of course my responsibility to do an annual review with my provider to see if they can lower the rates which they usually do by a very small amount each year and also to check with the competition every so often to see what they offer. If it is less I can usually take this to my long-time provider who will match it because they want to keep me as a customer. I really hope Apple Pay comes to Canada soon and will be adopted by the major grocery stores, drug mart chains and so on. I still am a happy 5S user, but there is a good chance I'll upgrade again this fall and if Apple Pay was available it would be another reason to do so. Regards, Sieghard -----Original Message----- From: [email protected] [mailto:[email protected]] On Behalf Of Kelly Pierce Sent: Saturday, April 11, 2015 12:46 PM To: [email protected] Subject: Re: Apple Pay: Why CurrentC Is No Threat the only way this other system will gain traction is when merchants start sticking customers with a surcharge for using a credit card instead of cash or this other payment system. Most merchants pay a four percent fee to process a credit card. One restaurant here in Chicago with two locations and 150 employees spends more than $125,000 a year on credit card fees. It is the third largest expense after building leases and labor. the restaurant spends more on credit card fees than it does on food. I have met entrepreneurs who are developing credit card processing systems that charge slightly less then two percent, but this still is a considerable expense. If Apple ever adds ACH transfers to Apple Pay, this system is toast. On 4/11/15, M. Taylor <[email protected]> wrote: > Hello All, > > As I have posted to this list, I am a big fan of Apple Pay, electing > to use it whenever possible. It facilitates the most convenient, > transparent, and independent in-store purchasing experience I've ever > conducted. I use my iPhone 6 Plus to buy items via Apple Pay no fewer > than twice a week the last time being yesterday, at a grocery chain > called Whole Foods Market. > > I came across this article that was mentioned but was not written by > Mac Daily News. They simply linked to the original article. > > So, I have pasted the entire article below at the bottom of which you > will find the original URL. > > Enjoy, > > Mark > > Apple Pay: Why CurrentC Is No Threat > by Mark Hibben > Apr. 8, 2015 > > Note from Publisher: > The author wrote this article themselves, and it expresses their own > opinions. The author is not receiving compensation for it (other than > from Seeking Alpha). The author has no business relationship with any > company whose stock is mentioned in this article. > > Summary > > .A consortium of retailers has announced that mobile payments system > CurrentC will start operation in mid-2015. > .CurrentC is a merchant-oriented payment system designed to circumvent > the current credit/debit card system. > .The lack of focus on CurrentC users compared to Apple Pay probably > dooms it from the start. > With Apple (NASDAQ:AAPL) Pay becoming ever more widely adopted by card > issuers and more widely accepted by retailers, mobile payments was > bound to see new entrants. The latest to emerge is CurrentC, backed by > a consortium of retailers such as Wal-Mart (NYSE:WMT) and Best Buy > (NYSE:BBY). It will go live sometime in the middle of the year. Does > CurrentC pose a threat Apple Pay? No, it's hardly credible > competition. > > Cobbled Together > Whenever Apple comes out with a ground-breaking product, there's an > immediate scramble by its competitors to cobble together a solution > that superficially resembles the Apple product. The lack of attention > to detail, and the creaky, unreliable nature of these "competitive" > products is usually immediately apparent. Such is the case with > CurrentC. CurrentC represents a direction that Apple might have gone > if it hadn't come up with the better approach of Apple Pay. > > CurrentC basically takes the iOS Passbook approach for gift cards, > boarding tickets, etc., and applies it to debit card payments. In > Passbook, you show a scannable bar or QR code that corresponds to some > prepaid card, the merchant scans this, and the value of the purchase > is deducted. CurrentC works the same way, except that purchases are > deducted from the user's bank account via ACH transfer. > > In effect, the CurrentC app user (there'll be apps for iOS and > Android) is authorizing the CurrentC consortium, Merchant Customer > Exchange (MCX) to make an ACH transfer from the customer's account to > the member retailer's bank. So MCX has to have stored your bank > account information, and is involved with every transaction the customer > makes with CurrentC. > > In every important respect - ease of use, privacy and security - > CurrentC is inferior to Apple Pay. Let's look at each of these areas. > > Ease of Use: > > Passbook kind of made sense if you had a lot of gift cards or prepaid > cards that you didn't want to carry around with you. However, the > process of presenting the scannable bar code in CurrentC doesn't > appear to be significantly easier than just swiping a debit card. > Either way, you have to enter a pass code, and the time it takes to > scan the bar code is about what it takes to swipe the debit card. > > As an alternative, CurrentC merchant terminals can present a bar code > to be scanned by the customer's phone. Then, the CurrentC app sends > the ACH authorization request to MCX. This has all the pitfalls of > smartphone > photography: the customer has to orient the smartphone camera > properly, get the bar code in focus, hold the camera steady, then take > what amounts to a picture of the bar code. Simple. > > While one might argue that this is no less convenient than swiping a > debit card, it's certainly less convenient than holding your iPhone > over an Apple Pay terminal. > > Security: > > The key pillars of Apple Pay security are ignorance, and ignorance. > Once a credit or debit card is added to your Apple Pay-enabled > Passbook, Apple deletes your card information from its servers, which was > encrypted anyway. > From that point on, it's just between you and your bank, and Apple > doesn't know anything more about your card or your purchases with it. > > Ignorance is bliss. Ignorance means that Apple's vulnerability to > hacking is very low. Most of the time, there's nothing to hack. > > The other important form of ignorance for Apple Pay is in the user's phone. > The iPhone doesn't even carry the card information around. Instead, it > carries a device ID (essentially, a random number string) that the > bank associates with your account. In addition, the device ID is > stored in a special chip called a secure element, which no other > component of the iPhone > - hardware or software - can access. > > These safeguards are mostly lacking with CurrentC. MCX does store > customer account information. It has to, for the system to work. MCX > assures us that the data is encrypted and secure. Makes you feel so > much better, doesn't it? > > The CurrentC app doesn't have a secure element to make use of, so that > layer of security is missing as well. CurrentC does probably use a > device ID system similar to Apple's, but then, that can be sent (in > encrypted form) over wireless networks to authorize payment when the > smartphone scans a CurrentC terminal bar code. > > Privacy: > > MCX is very upfront in its pitch to merchants about customer privacy. > There is none. Merchants will have the opportunity to exploit customer > purchase history, in order to offer special targeted discounts and > promotional deals. > Your purchase data is an important product to MCX members. > > Merchant Benefit > This is a product architected not for the benefit of the consumer, but > for the benefit of the merchants who are members of MCX. Unfortunately > for MCX, the key feature most appealing to merchants will be the > downfall of CurrentC. CurrentC is all about circumventing the current > debit/credit card authorization system and the fees that merchants are > required to pay for each transaction. > > For that reason, it does not support bank credit cards, except for > merchant-supported cards. This makes CurrentC relatively inflexible > compared to Apple Pay. Apple's decision to offer Apple Pay as an > augmentation to the current credit card authorization system was the > smartest thing the company did. It meant that card issuers got on > board with Apple Pay with no reservations. Apple now has more than 180 > card issuers. > > Adoption of Apple Pay by retailers has been slower primarily because > of the cost of the new NFC terminals. Not needing NFC is the sole > advantage of CurrentC, but it will prove short-lived. In the end, > CurrentC is just another example of a group of businesses trying to fight the > future. > NFC-based digital payments are the future, and Apple has skated to > where this puck will be. > > The MCX merchants will try to force customers to use CurrentC. They'll > bar Apple Pay, as some member companies already have. They'll offer > incentives such as discounts, rewards points, "free" gifts in order to > encourage CurrentC use. It may work for a while. Large retailers such > as Wal-Mart and Best Buy have some clout. > > MCX also has indicated that it might adopt other technologies in the > future, opening the door to some form of radio-based (Bluetooth or > NFC) payment system. In that case, they'll be starting well behind the > curve. In any case, NFC-based payments will eventually replace all > magnetic stripe card readers. > > Impact to Apple > It almost doesn't matter whether CurrentC or any other competing > mobile payments system is successful. Although we don't know much > about Apple Pay monetization, we know that it probably doesn't work > like conventional credit cards. Since Apple doesn't track user > transactions, it's unlikely to collect a per-transaction fee, which is > the norm for participants in the current credit card payment > authorization system. > > The most likely point where Apple can collect a fee is when an Apple > Pay user adds a credit or debit card. We know this doesn't cost the > user anything, so if anyone is paying Apple, it would have to be the > card issuer. > Judging by the level of support by card issuers, that fee, if any, > must be very reasonable. > > Judging by Apple's SEC filing for the December 2014 quarter, those > fees are probably negligible. Apple Pay revenue is booked under the > Services category, and Apple Pay came on-line in the December quarter. > The Apple Services segment booked only a 4% sequential gain over the > September quarter, going from $4.6 to $4.8 billion. Hardly a cash cow. > > The importance of Apple Pay is as a value-added service similar to > iCloud for iOS users. It enhances the value of the iPhone, increases > sales, but doesn't of itself generate a lot of revenue. From a revenue > standpoint, it almost doesn't matter whether CurrentC or any other > mobile payment system is successful. > > As long as Apple offers the best mobile payment service, and the > service finds widespread support through NFC terminals, Apple Pay will > achieve its primary mission of making the iPhone even more desirable. > > Original Article at: > http://seekingalpha.com/article/3056906-apple-pay-why-currentc-is-no-t > hreat > > > -- > The following information is important for all members of the viphone list. > All new members to the this list are moderated by default. If you have > any questions or concerns about the running of this list, or if you > feel that a member's post is inappropriate, please contact the owners > or moderators directly rather than posting on the list itself. 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