These companies are (mostly) the companies that, in 2012, decided they wanted to fight Apple and establish their own phone-based payment system.
This MCX consortium was promoting its own (QR code-based) payment system called CurrentC, which required users to authorize the system to directly debit checking accounts (via an ACH transaction) instead of billing credit cards. The system was never used - it got shut down during its initial beta testing and never came back.
In order to try and convince people and merchants to “switch” to CurrentC, MCX member merchants installed software in their card readers to explicitly block ApplePay. Because an ApplePay transaction is pretty much indistinguishable from a “normal” contactless credit card transaction, the merchants implemented these blocks by getting point of sale terminals without NFC readers (disabling the readers in pre-existing terminals). Which blocked ApplePay, but also blocked NFC-based payments from Google, Samsung and physical cards.
Today, MCX and CurrentC are gone and mostly forgotten, but its member companies still haven’t gotten over their collective hissy-fit, and therefore still do not support any NFC-based payment systems in their stores.
One reason I still have to carry my wallet with me is that I like to shop at Home Depot. Even small corner gas stations accept Apple Pay these days. While Lowe’s takes Apple Pay, HD does not or even tap to pay. Last I heard, it does not have any plans to accept Apple Pay, ever. I certainly hope that will change.
Hey that is interesting! I knew it had been years for Home Depot. I believe when my Apple Pay was first refused, they still accepted Android Pay because I kind of remember grumbling about them being anti-Apple. But I know recently it’s all phone pay that is banned. Cashiers say people complain about it all the time!
CVS has its own app for ones Extra Care card. For while I could pay right through the app but I don’t remember exactly how - was it picking up my App Pay card or did I have to enter it into the app? That eventually disappeared and now Apple Pay works.
I am not a huge shopper in general, but in the past couple of years I ordered online for pickup something at Walmart, and tried to buy something else while there and nope, Walmart Pay or physical cards. At that point I just leave the item.
Thanks @Shamino for splitting the former topic, because @Simon made a comment there I wanted to explore a bit (hopefully not setting us up for another split…).
I’m under no illusion that the money simply appears by magic. But my usual practice is to put as many of my daily expenses on my Chase Freedom card as I can, and then pay it off every month. And every month, I get a nice credit on my account based on the previous month’s purchases. There are no fees (to me) for using the card. So are you saying I’m paying for that cash back in the form of higher prices? Which would imply that if you don’t use a cash back card, and you shop at the same places I do, I should thank you for part of that money.
I’ve used my phone and ApplePay (with my bank’s credit card) in many stores where the staff said it wouldn’t work. Works fine.
The only places I’ve been to where my phone doesn’t work are places where tapping the physical card doesn’t work either.
If it is possible to block ApplePay without blocking contactless cards in general, I haven’t ever seen it in action (in the Washington DC metro area). All the stores I’ve been to that block one also block the other.
Thanks for the confirmation, that was my impression too. And sorry I didn’t see you’d (sensibly) started this topic before posting in the other thread!
I view cash-back features on credit cards as an incentive, a reward, and an offset.
The incentive is to consolidate my financial services activities into a particular provider. The reward is for using a particular credit card instead of another. The offset is for higher prices at retailers caused by shoplifting, other types of fraud, and, in my city, governmental actions and inaction.
I’m far from an expert here, but as I understand it:
Credit card companies make money (generally) in three ways:
Interest
Fees
Interchange
The interchange money is the interesting part. If you have a card issued by one store that only works at that store (which used to be really common in the past and is still popular in some circles), the expenses to run the card business are relatively low. It’s really just the store extending lines of credit to its customers and getting paid back by those customers.
But “interbank” cards (which got started in the 70’s with Mastercharge, I believe) are a bit different. Lots of banks issue cards on the network and lots of stores accept all of the network’s cards. So there is an interchange service to negotiate where all the money goes.
A merchant that wants to process charges gets a “merchant account” from a bank for one or more network’s cards. All the charges they put through go to that bank. Their bank forwards the charges to the appropriate network, which forwards them on to the bank that issued each customer’s card.
All of this extra networking costs money, and the costs are generally paid by the merchant. They pay monthly subscription fees, plus per-transaction fees (usually a fixed amount plus a percentage of the amount charged). These fees are set by the bank they got their merchant account from and can vary greatly based on a number of factors including:
Which bank is issuing the merchant account
What card networks they want to accept (e.g. American Express charges more than Mastercard or Visa)
How much business they do - more transactions and more charges tends to yield a lower per-transaction charge.
How the charge is processed (contactless, chip, swipe, hand-entered, etc.) In general, the more secure and more hands-free mechanisms cost less.
All the usual things that affect banking costs, like location, credit rating, etc.
The key thing here (again, as I understand it), is that the merchant pays the fee, but the rate is not dependent on who issues the card to the customer. So a hundred people using Visa cards issued by a hundred different banks, using the same processing mechanism at the same merchant, will all yield costs based on the same fee schedule.
Where do the merchant fees go afterward? Some goes to the bank he’s doing business with, of course. Some goes to the network routing the charge. And the rest goes to the card-issuing bank.
Of course, different banks have different expenses. Some banks may need all of that interchange money in order to keep processing charges. While others (especially the really big ones that can take advantage of economies of scale) may only need some of that money.
So what do they do with the interchange money they don’t need? Some just pocket it and report higher profits. But others will reimburse their customers. And that’s where the money for the rewards programs comes from.
Now you might say that it would be better if someone (e.g. government regulation) would put a cap on merchant fees. That might reduce a merchant’s expenses, but it will also mean that the interchange fees going to card issuers will go down. The big banks offering rewards will stop. And the smaller banks that need the higher fees will be forced to pass those fees on to their customers in the form of higher interest rates and higher annual membership fees. It may help one part of the picture, but it really just replaces one kind of problem with a different kind of problem.
And we already saw this once. In 2010, the US government imposed such a cap on fees for debit cards. And all debit card issuers immediately dropped all their rewards programs. And despite promises to the contrary, merchants did not lower their prices one cent.
“But “interbank” cards (which got started in the 70’s with Mastercharge”
Bankmark came out in about 1968 IIRC but didn’t survive long. Before that in the '50s there was the more specialized Diner’s Club for restaurants, and the American Express card is almost that old. I’m pretty sure there were a few others in the late 50s-mid 60s era. But it was late 60s through early 70s that they finally became ubiquitous both for customers and stores accepting them.
I remember my mother carrying around about a huge stack of “charga-plates” in a special wallet, one for each store–and there were a lot of stores back then, well before merger feeding frenzies. They were a little smaller but much thicker than modern credit cards.
Diner’s Club and American Express aren’t interbank cards - each is only issued by a single bank, although they are accepted by many different merchants. Which means there (should be) fewer layers of routing for transactions to be processed.
This is in contrast to MasterCard (originally MasterCharge) and Visa (which began life as a single-bank service, BankAmericard, run by Bank of America), where there are many card-issuing banks as well as multiple accepting merchants.
Thanks for that information. I thought they were all issued by American Express.
And I see that Diner’s Club, Discover and Unionpay are also inter-bank cards, but with a very small number of issuing banks.
And Diner’s Club appears to have changed mostly into a co-branding. According to Wikipedia Diner’s Club cards in the US and Canada are now co-branded MasterCard cards. And Diner’s Club International is now a part of Discover.
So it looks like the only non-interbank cards these days are going to be merchant-specific cards.
I still have two major stores in my area that do not take phone pay: Home Depot and Michaels and they’ve been that way for years (HD used to take them a long time ago). There may be more.
I never carry my credit card anymore because it’s on my phone but now and then I get burned running errands because I forgot where I am going.
Absolutely. It’s definitely not a certain thing, but it’s at least mostly feasible to walk out the door without your wallet nowadays, and I’m here for it.
And I believe Home Depot lets you pay without a physical card (maybe only if you use their credit card? I don’t shop there much).
I wonder how this is possible. I didn’t think merchants could discriminate against different contactless cards (as long as they’re from a network the merchant supports, e.g. Mastercard or Visa).
I haven’t carried a wallet regularly for about 4 years. I just toss my license in my door pocket. I think I took one on vacation just to carry my AAA card and a few other things but I never walked around with it.
I am guessing you can pay without a physical card if you have an account with your HD card hooked up to it? Because telling them I had the card info on my phone sure didn’t work! I don’t have a HD card myself. A card can be entered manually if they know how but it’s really not even worth the hassle to ask them to do it. I just go back another day if I don’t have the cash in my pocket. I don’t shop there much either, I prefer to give my money to the old hardware store down the street that does take phone pay and has many other perks.
Cashiers are generally instructed not to do this because the store has to pay higher transaction fees, and has less liability protection for card-not-present transactions.
They take contactless cards. They do not take phone pay. That’s separate in the credit card processing world. You can have a terminal the accepts Apple Pay but you don’t have to have it turned on.
My biggest pet peeve is a brand new gas station that doesn’t have phone pay enabled at the pump.
A merchant can choose not to support Apple Pay. Why not? Why should they be forced to pay higher fees for Apple Pay when they can accept other payment methods that cost them less? (It’s especially apparent in countries where consumer protection laws prevent the big networks from stipulating all-or-nothing clauses.)
Who do people think pays for those 2% Daily Cash?
There is no free money. Cash back is a scam we end up paying for ourselves. I know people here in the States don’t like hearing it, but it’s still true. None of you know how much your merchants are being charged for your “cash back”. You think you’re winning, but fact is all these payments go around in a circle (where the smart player is the network skimming their cut off the top). It’s just a sucker’s game to see if you can extract (the thing you keep a close eye on) more than you pay in (the thing you don’t really know). And because of the asymmetric knowledge distribution, most people lose that game without even knowing about it. A Nobel Prize was awarded for analyzing just such situations. It’s interesting from a game theory POV, but in our everyday reality, it’s just a marketing ploy. And chances are, you’re losing that game. Especially those gullible enough to be convinced they’re winning. Those who truly are winning, will remain quiet about it.
But my usual practice is to put as many of my daily expenses on my Chase Freedom card as I can, and then pay it off every month. And every month, I get a nice credit on my account based on the previous month’s purchases. There are no fees (to me) for using the card. So are you saying I’m paying for that cash back in the form of higher prices? Which would imply that if you don’t use a cash back card, and you shop at the same places I do, I should thank you for part of that money. 
