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Comment by mortenjorck | Hacker News Reader

The Verge has buried the lede here: major retailers are banding together to compete with Apple Pay, with their own system made out of QR codes and direct access to your checking account. Given the security track record of US retail the past few years, one might wonder what could possibly go wrong.

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Given the anti-competitive nature of this move, combined with the massive market power of those involved, I think the DOJ might take some action here. "Let's band together to crush our competitors and ensure the success of our own product" is generally illegal under US law. As a consumer, this is actually pretty upsetting, and I would be in favor of legal action. This doesn't just affect Apple Pay - it affects all contactless payments. I quite often use(d) my contactless debit card at CVS.

All of this to promote a payment system that literally has a 0% chance of success. As noted in the parent comment, given the history of major retailer data breaches, no one in their right mind is giving these people their checking account information. It's just not going to happen.

> All of this to promote a payment system that literally has a 0% chance of success.

I don't think so. If retailers choose to not support a system then the system itself is kinda doom because this system was made for retailers.

The current payment systems are becoming obsolete at a fast pace (faster than I thought anyway). Cryptocurrencies, large chains of retailers rolling up their own payment system, etc.

Just a small comment on security: Most banks suffer serious hacks that you and I never know about it, for obvious reasons. So don't be so sure that banking systems are more secure than retailers.

>I don't think so. If retailers choose to not support a system then the system itself is kinda doom because this system was made for retailers.

I disagree. I think people will just wind up using their standard cards if given no alternatives that are viewed as safe by most people.

>Most banks suffer serious hacks that you and I never know about it, for obvious reasons. So don't be so sure that banking systems are more secure than retailers.

True, but regardless, the banks have won the PR war here. For consumer products, that's really all that matters. When it comes to widespread consumer trust, perception is reality.

If the DOJ gave a damn about monopolies, you'd figure they would have broken up the credit card cartel, or Apple itself

> credit card cartel

Europay, MasterCard, and Visa? What about Discover, Diner's Club, or AmEx?

> or Apple itself

Is this supposed to be the app store, OS X, or the old iPod argument?

Anticompetitive goes both ways, though. Currently, on iOS, there is no NFC API at all; you might be able to accomplish something similar with iBeacon, but you can't replicate Apple Pay's single-touch flow (AFAIK, you'd have to swipe the notification, fingerprint to unlock, and then fingerprint again to confirm payment once the app had launched). Now, Apple is not a monopoly, and admittedly this is all brand new - opening up the secure element would be an implementation challenge, and it's possible that a new extension point will be added for lockscreen NFC handling in a future version, although not adding it would be nothing out of the ordinary for Apple. But the net result, for the time being, is that the retailers' payment system looks essentially doomed from the outset, since it can't compete with Apple's system on Apple devices.

Working by itself, Apple isn't being anti-competitive under US law. Anyone can be as exclusionary as they like on their own. Several of the largest retailers in the country working together to specifically block Apple Pay (and all other contactless payments), in favor of their own payment solution, is clearly anti-competitive behavior under US law.

True. I'm just saying that in a looser ordinary language sense of "anticompetitive", Apple by itself probably brings an amount of market share to bear comparable to these companies together - at least out of all US retailers supporting smartphone payments.

> I'm just saying that in a looser ordinary language sense of "anticompetitive"

I don't think that's a normal definition.

"Today Hoover released their new anti-competitive vacuum". Why is it anti-competitive? "They didn't create a network of 3rd party bag manufacturers on day one."

If they were going out of their way to prevent it (such as when Keurig or the printer companies added DRM to stop clones) that's one thing.

Apple doesn't let you choose a different keyboard manufacturer when you buy a MacBook either. Is that anti-competitive? Amazon's Kindle cases don't work with Nook tablets. Is that anti-competitive?

I think you're reaching here.

>Anyone can be as exclusionary as they like on their own.

This isn't true once you get into monopoly territory, although that is not a concern in this case.

Security from credit cards isn't really any better, it's just that they established very strong fraud detection mechanisms and have accepted eating the losses from credit card theft as a cost of doing business. When I lose my credit card and someone starts using it to make purchases, so long as I notify my issuer promptly, they absolve me of being responsible for the fraudulent transactions.

So long as this new system accepts that this is a cost of doing business and implements a customer service policy where the risk is spread among all retail participants, this would be competitive with the status quo.

These merchants aren't going to get out of paying fees, but they should be able to reduce those fees to the cost of providing a competitive service to the credit cards. The benefit is that they won't have to also pay higher fees than necessary to get the benefit of the system.

If they provide this basic safety feature, than upgrading security will be a given since it will reduce a major cost on their balance sheet, which is dealing with fraudulent transactions.

> So long as this new system accepts that this is a cost of doing business and implements a customer service policy where the risk is spread among all retail participants, this would be competitive with the status quo.

If they do this, then essentially the retailers would be setting up a credit card company of their own. But why would we expect their fees to be lower than the fees from the existing credit card companies?

The credit card servicers aren't eating the losses - they offload these onto the merchants. So retailers are already eating the risk while also paying fees.

The customer end up paying for it anyway you look at it but at least the credit card insurance comes with it.

They're also getting the benefit of easy and quick payment.

If a big chain tried to go cash and check only, how well do you think that would go over? Even if they included debit cards, my guess is it would be a big problem. I bet shareholders would revolt. The only reason they may get away with this is Apple Pay isn't established yet so there is no perceived 'loss'. Another commenter was right that if Apple pay impacts their growth numbers they may be forced to reconsider.

Au contraire - security from credit cards IS better than the proposed competition from the retailers, which avoid CC fees by deducting your payment directly from your bank account.

Credit card security is better simply because it doesn't take your money directly -- the charge is added to a credit account that you then pay (or not pay if you dispute it).

While debit cards / bank accounts offer the same protection as credit cards, in that you have 0% liability for fraudulent/unauthorized charges, it still can take a period of time in order to "get your money back" after your account has been drained. That can pose serious problems if you are depending on that money to pay rent and other bills. Thus, the effective security of credit cards is in fact higher, because you are not parted from your money while you are waiting for the dispute resolution.

Sorry to pile on the "you're wrong" argument, but the existing replies don't address the distinction between ApplePay and CurrentC, and yes, ApplePay is more secure. CurrentC provides a central point of failure (and attack, for that matter), since they hold all the account details in their system. Contrast that with ApplePay, which doesn't even use the actual credit card number for the transaction, but instead a device-specific, remotely wipeable, single-origin system. ApplePay is definitely more secure, and I will actively seek out retailers who let me use ApplePay and avoid those that use CurrentC.

Why wouldn't you just shop where you want and use a credit card wherever ApplePay isn't supported?

Voting with my dollars. Retailers who have success with ApplePay will make no secret about it, and those that aren't using it have to compare their YoY numbers to the published ones of those using ApplePay. Using my credit card as normal doesn't send that message. Not that my spending alone is enough to sway an industry, but if enough people vote with their dollars, the message gets sent.

I guess I was really asking why you, as a consumer, care if a retailer supports ApplePay? Is the checkout experience that much better in your eyes vs an ordinary credit card? Or do you like the added security? Or something else?

All of the above. I don't like carrying my wallet, but I always have my phone, so being able to use it in place of my wallet is something I want. I love the added security - I shopped at each of the major retailers to have a breach in the last year, and got a new debit card issued each time, which is a huge pain the ass. And, in general, it pushes the industry forward, which is good for everyone. If ApplePay gains traction, so will Google Wallet, and Windows Phone will have the road paved to offer NFC-payments.

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