The Idiocy of CVS and Rite Aid

dunceBy now you have probably heard CVS and Rite Aid have disabled their NFC radios in check out terminals in order to block Apple Pay and Google Wallet. The reason is they, along with Walmart and about 45 other merchants, are working to create a competitor called CurrentC that eliminates their paying a fee to the credit card companies and gives them the ability to track what you buy. This so they can send you ads and follow up on offers you might be interested in based on what you have bought in the past. They already have loyalty card programs that do this but many don’t use these loyalty cards and therefore the retailers have no clue what a person bought. With CurrentC, they get everyone to tell them what they purchased so they can target everyone with ads and offers. 

From what I hear, CurrentC does not work well and, while it may be good for the retailers, it most likely will anger many customers if they try to push this on them. The concept of tracking what a person buys has not worked well for Google Wallet. Google Wallet also tracks what you buy and the credit card companies are obligated to send that data back to Google so Google can then target you with contextual ads. For example, if I bought a lawn mower at Home Depot, Google wants to know so they can send me ads about lawn fertilizer, leaf blowers, etc. I spoke to a couple of credit card companies who did not want to support Google Wallet because they did not want to be the middle man sending private data back to Google so Google could target their customers.

This is one of the reasons they don’t like Apple Pay. Apple does not share what a person has bought with the retailers and only uses a token from the banks to create the transaction. Of course, the merchant can track what they bought through their terminals but they have no way to target customers with ads if they don’t have personal information in their database to target after the sale.

What irks me the most about this is, from what I know of retail, the goal is for me to buy stuff from them and for them to take my money. They should care less about how they get my dollars. Their reason to exist is to serve the customer and take my hard earned cash. Putting up barriers to taking my money is idiotic. Now, I have to admit, the root of my thinking lies in the fact so many times when I go into a store there are long lines of people waiting to check out because they don’t have enough cashiers. When this happens, I always ask myself, “Why in the world don’t they have more people taking my money and servicing me and others in a timely fashion!”

I also admit I am spoiled by Apple. I can walk into an Apple store, pick up what I want, take it to any of their services reps who then use a handheld scanner to take my credit card and I am out the door in minutes. Now, with Apple Pay, that experience will be even faster.

The backlash against CVS and Rite Aid is pretty strong. From what I have read, CVS has conveniently not commented on this and Rite Aid’s official position is they continue to review options on the way people can pay. All Walmart has to add is CurrentC is in the best interest of the customer. Really? As a consumer, I am already bombarded by ads from Google and others and am not inclined to now have CVS, Rite Aid and even Walmart join in the fray. That is why what Apple is doing is so important and is the better business model when it comes to the consumer. They protect my privacy and keep me from being besieged by merchants who could care less about my privacy and only want to bombard me with ads.

I understand the need for ads and, in fact, there are some ads I want. I happen to be an avid traveler, foodie and am very interested in scuba diving gear. Ads related to this get my attention. However, as I was researching this column I decided to check how many ads I get in email and via unsolicited ways each day and found out that, on average, I get about 120 ads I have no interest in. If I used CurrentC I would get even more.

Rob Pegoraro over at Yahoo has written a great piece — “Why Some Stores Won’t take Apple Pay and how to Punish Them“. It is a good read and gives even more details on how CurrentC works and why these retailers want consumers to use it.

CurrentC is only in beta now and won’t actually launch until 2015. On a personal level I would never use CurrentC and if I should have to buy something from these retailers I would just use a credit card with the highest transaction fees. I also suspect a lot of people will not use CurrentC either when they realize you have to give them your social security number to even sign up. These retailers need to wake up and understand they should not dictate how people pay them. Their goal is to take my money and make it easy for a consumer to do it in any reasonable way a transaction can take place. If not, they can expect a backlash from customers and they would deserve it.

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Tim Bajarin

Tim Bajarin is the President of Creative Strategies, Inc. He is recognized as one of the leading industry consultants, analysts and futurists covering the field of personal computers and consumer technology. Mr. Bajarin has been with Creative Strategies since 1981 and has served as a consultant to most of the leading hardware and software vendors in the industry including IBM, Apple, Xerox, Compaq, Dell, AT&T, Microsoft, Polaroid, Lotus, Epson, Toshiba and numerous others.

10 thoughts on “The Idiocy of CVS and Rite Aid”

  1. It’s a disaster. Twice this week I paid with Softcard at a NFC terminal. Once at Staples, and tonight at Office Depot. Both times I had to sign.

    1. That should put a dent in shoplifting, unless they have large RFID blocking bags like the ones you can get for credit cards.

      1. Thanks for the link. It’s a great example of using technology to solve real world problems.
        In the US, some merchants and service providers don’t accept cash. It’s amazing to me that they don’t accept the country’s legal tender! I’m not talking about validating the currency’s authenticity, they don’t accept it at all.

        But like I said, this is a first world problem. Kenya seems to have it figured out. 🙂

  2. When Apple Pay was launched, CVS and I Rite Aid accepted it in their stores for about a week, which meant their terminals were ready for it and their systems worked with it. They had a useful, operating payment option already in place for their customers, and everything was fine. And then what did they do? They turned it off!!

    That’s the dumbest move I’ve seen in business in quite a while. They’re now saying no to their customers on a way to pay for items that customers want to buy in their stores! Why? I think they’re afraid of Apple Pay, and they should be. The reports so far on Apple Pay are that people who’ve tried it, like it, and the competing system (CurrentC) won’t be ready until next year. I feel nearly certain that by then, Apple Pay will be strongly enough established that it will be a tough act for CurrentC to follow.

    Here’s the worst thing about CurrentC: the merchants don’t want it because it offers a benefit to their customers, they want it because it offers a benefit to themselves. That’s the wrong reason. Both Apple and Amazon are enormously successful primarily because they follow the obvious logic that the customer signs the paycheck of every employee in your company all the way up to your CEO, therefore you should put the customer’s interest first, and treat him like a king. The customer doesn’t give a —- whether CurrentC helps the merchant! The customer just wants what helps *them.* By focusing on their own misguided wants, CVS, Rite Aid, and all the others backing CurrentC are driving down a road that will turn into a dead end in 2015. Nice plan guys – you’re going to run out of gas.

    1. I think you’re right. It’s a huge tell that they actually disabled NFC to stop ApplePay. They must feel really threatened. I don’t know why they feel this way so deeply, but it has me interested.

      1. The true sign of Apple’s assumed dominance in mobile payment was given credibility when the NFC readers were disabled.

        MCX said that accepting any mobile payment other than CurrentC was a violation of the non-compete agreement all of those merchants signed back in 2012. What’s interesting is that Google Wallet, released in 2011, was perfectly acceptable meaning MCX didn’t see Google Wallet as a credible threat. And why should they. Thanks to Verizon and AT&T they both did their best to block GW in favor of their own systems, which I assume no one even knows about or uses.

        Enter Apple and suddenly taking payments from smartphones is a violation of the MCX contract.

        It’d be one thing if CurrentC was on the brink of being available in the next few weeks but all we know is 2015, which could mean January or December. The fact that it’s been on the whiteboard for two years doesn’t bode well for the future of the platform.

  3. Your social security number is just the start. According to the write-up from TechCrunch the CurrentC app also wants access to your health data, your address book, GPS data, browser history, political affiliations and then share that data with other 3rd-party apps, vendors and merchants.

    From the TechCrunch article, here’s how a CurrentC transaction happens:

    “When it’s time for a user to check out, they request to pay with CurrentC. The consumer then unlocks their phone, opens the CurrentC app, opens the code scanner, and scans the QR code shown on the cashier’s screen. In some cases, the reverse may happen where the consumer’s CurrentC app displays a payment code and the cashier scans it. If a QR code can’t be generated, a manually entered numeric code may be offered.”

    source: http://techcrunch.com/2014/10/25/currentc/

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