Points of sale are one of the few places where it is known
people exchange money for goods or services. In the Halcyon days before payment
cards, a merchant accepted cash or checks and consumers carried those payment
methods with them. Now central banks want to eliminate the paper check and no
one carries cash with them unless to buy illegal goods or services. In some
cases underground outlets accept plastic. Yet for the many diversified ways to
pay, the fees for payment keep increasing to the point that merchants make ridiculous
attempts to avoid them (see http://paymentnetworks.blogspot.com/2014/10/why-retailers-cant-build-payment-systems.html
for my discussion on CurrentC) and charlatans create fatally flawed crypto
currencies such as Bitcoin (see http://paymentnetworks.blogspot.com/2014/06/an-analysis-of-bit-coins.html
) to prevent middlemen from picking retailer pockets.
Now point of sale (POS) equipment manufactures recognize
that consumers will originate payment from continually changing technologies
and so build machines to accept all of them (see http://www.paymenteye.com/2014/10/30/former-head-of-google-wallet-debuts-alternative-payments-terminal/
). Is it not time to ask if the diversity is unwanted and used not for efficiency,
security, or cost advantage, but because retailers must offer all the choices
foisted on the consumers by all those eager souls desiring to sit just between
the wallet and the till.
A retailer that does not accept a method of payment that a
consumer uses will lose a sale, which is the main reason they bow to the ridiculous
requirement of a chip card when their current POS devices effectively do the
same thing with PIN entry and derived unique key per transaction (DUKPT). The
card service industry sells consumers a pack of lies on a routine basis by insinuating
consumer laws do not protect their accounts or that theft of card data
necessarily means a successful attack against consumer accounts. How many
parrots out there clamor incessantly about the growing threat of cyber attacks
against payment systems when actual details of the percentage of successful
attacks compiled by the Fed in the US and many other European and other
countries show successful attacks against brick and mortar retailers pale in
comparison to the value successfully cleared and settled. When a PIN accompanies
a purchase request, there are few claims of a successful intercept of payment
data and subsequent attack (See Federal Reserve System; The 2013 Federal
Reserve Payments Study Recent and Long-Term Payment Trends in the United
States: 2003 – 2012 Summary Report and Initial Data Release; (December 2013);
p.32 and ff http://www.frbservices.org/files/communications/pdf/research/2013_payments_study_summary.pdf
).
The retailers are not helping their own cause, because they
keep insisting that consumer payments originate from retailer payment requests
to the consumer financial institutions. The complaints about payment service
monopolies, interchange fees, and charge backs occur because of the firm but
unsubstantiated belief that knowledge of customer payment data increases
marketing and future sales opportunities. The CurrentC architecture uses the
current payment system architecture with “pull” logic. The only difference is
knocking out Apple Pay and all other Near Field Communication (NFC) origination
technology but unless a retailer issues the payment card or routes the card
correctly to the authorizer, transaction costs remain virtually the same, regardless
of promises of huge discounts.
There is the possibility that consumers do not care how they
pay for their goods and services as long as a payment does not result in a
successful and uncompensated attack on their account and the initiation method
is not overly awkward or time consuming. If the origination method also means a
discount over another method, then cost conscience consumers use the least
expensive method. So why do financial institutions (FI) issue debit cards and
let their consumers use them over credit card networks? The interchange fee
seems like the most logical answer. So how do retailers get money from consumer
FIs without astronomical fees? They ask consumers to push money to retailer
accounts and let them do it for less than a percentage plus a fixed fee and
both sides of a transaction split the middleman’s money.
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