MCX - a lousy substitute for proven technology

Lots of discussion the last few days about Rite Aid and CVS (and possibly other merchants) actually disabling existing NFC point of sale functionality simply because they were suddenly getting used (by Apple Pay).

NFC payments are nothing new – Android has supported them for a couple years now (on select phones, though not without some complicated political shenanigans between manufacturers and carriers). Not a lot of places support such contactless payments, though I’ve certainly been seeing more and more POS terminals with NFC-looking logos lately. And I’ve seen a LOT of new POS terminals going in recently (at Panera and Target, in particular) which definitely support the upcoming EMV (“Chip and PIN”) cards, and I believe also support NFC.

So it was a bit of a surprise when suddenly Rite Aid and CVS stopped processing NFC payments. The rumor is that they have some agreement with the Merchant Customer Exchange to specifically prohibit Apple Pay, which is silly. Apple Pay isn’t anything new (as far as I can tell), it’s just implemented on a very popular phone and so is actually getting traction today.

In a way, disabling all NFC payments is almost like saying “okay, yes, that’s a valid payment method, but we don’t take magnetic stripe cards anymore, sorry.” It would seem to me that the card networks (Visa, MasterCard, etc.) should be able to have a say in this, but I’m not sure they’ve spoken up yet.

This is all made much worse by the apparent reasoning behind the new policy: They want to push their own solution. Which itself has several problems:

• It’s much clunkier (you have to launch an app, scan a code, accept the charge, and then display a new code on the phone for the cashier to scan back)
• It’s not as secure (on iPhones, the Apple Pay data is stored in a separate, secure chip. For these apps, it’s stored in the phone’s filesystem)
• It links directly to your checking account (not to bank credit cards)
• It’s not as private (one big goal of the system is to “encourage loyalty” by providing customers with targeted offers and coupons)
• It’s not even available yet

Obviously, the “friction” that such a cumbersome interface presents is a big reason that I think this will eventually fail. But I’m far more worried about the direct links to bank accounts. And much more annoyed about the “loyalty” and privacy aspects.

If a merchant wants my loyalty, they can build it, strongly, in a very simple manner: Have the products I want, at prices I find reasonable, and offered in an environment with a pleasant shopping experience. Fail on any of those three criteria and I’ll only shop at your store grudgingly. Succeed on all three, and your locations will always be at the top of my list.

In addition to the great Tech Crunch article linked by this post, there’s also some good commentary from Gruber (which links to some other articles), and I think the simplest description of the problem in this great image from Dan Frommer.

For once, I’m glad that my iPhone is a year out-of-cycle. By the time I’ve upgraded to the iPhone 6S (or whatever it’ll be called), hopefully the MCX thing will have died a very swift and public death, and Apple Pay (along with Android based NFC payments as well) will simply work.

As @BenedictEvans said:

Few things are more predictable than the failure of a tech product made by an industry consortium of non-tech companies.

I can’t wait for this prediction to come true.