This Month in Payments News: October 2014

Each month we round up the most interesting news in payments, the stories that have the potential to change the industry in ways big and small.

In our monthly series here on the Resource Center, we round up the biggest stories in the payments industry -- the breaking news and developing trends that stand to change this space and herald innovation. In this edition, we’re covering October. Follow along!

October was a big month for the payments industry, with yet another credit card breach, plus MCX’s response to Apple Pay and a somewhat surprising new player in the mobile payments space ...

Here’s the big news from October:

 

Apple Pay Competitor CurrentC Faces Security and Adoption Concerns

Jack Ma, founder of Alibaba, expressed his interest in teaming up with Apple Pay at the Wall Street Journal’s first WSJDLive tech conference on October 27. But not all retailers are gushing over the company’s recently announced payments system.

Enter competitor CurrentC, the latest effort from Merchant Customer Exchange (MCX). MCX is a consortium composed of more than 70 retail companies who have banded together to create their own payments system. At the moment, they are leading the charge against Apple Pay. CurrentC is currently in private beta tests and set to become available to the public in 2015.

Apple Pay will not be available at any MCX-affiliated retailers, which are responsible for one-fifth of dollars spent at stores in the U.S. MCX members include include Lowes, CVS, Walmart and Bed Bath & Beyond. While some stores, including CVS and Rite Aid, have chosen to turn off their NFC terminals and not accept Apple Pay, Best Buy has gone as far as removing the systems from their stores.

However, CurrentC is facing serious issues even before it has officially launched, including iPhone and Android users joining forces to give the app over 2,000 single-star reviews in the app store without having used it.

It’s also worth noting that CurrentC already faces serious security concerns. In fact, hackers were able to access email addresses used by those testing the app several times over the course of a week.

As for Apple Pay, payment security experts are feeling relatively confident that it will live up to the hype and deliver a secure experience for shoppers.

 

Kmart Announces Data Breach and Staples Launches an Investigation of Its Own
 

October wasn’t the worst for data breaches so far this year, but this month, two companies did make headlines with their security woes. 

First up was Kmart on October 9, when the Sears-owned company found that their POS systems had fallen victim to malicious software. In response, the company issued a statement indicating that no customers had been impacted in the breach. 

Back in July, the Department of Homeland Security noted the prevalence of Backoff, a package of malicious software that has targeted systems at several other retailers. It’s possible Kmart’s breaches are also connected to this malware, according to Forbes.

Later in the month, cyber crime reporter Brian Krebs was the first to report a potential breach at some of Staples’ stores in New York, Pennsylvania and New Jersey. Neither Kmart nor Staples have released data on the size of these attacks, but we’ve seen time and time again this year that retail security breaches can reach staggering numbers -- Home Depot’s affected 56 million customers, and Target’s touched 40 million. 

Retailers large and small need to get serious about security before they become the next victims.

 

Etsy Enters the Card Reader Game
 

In an effort to enable omnichannel shopping experiences, craft marketplace Etsy has rolled out free credit card readers to a select group of U.S. sellers. The readers attach to a merchant’s tablet or smartphone and sync with Etsy’s existing apps to allow sellers to accept payments while at craft fairs and other markets. 

When Etsy blogged about the October 23 announcement, the company noted that, despite the rise in online shopping, 90 percent of retail goods are still purchased offline.With 35 percent of their sellers participating in these types of marketplaces, this move will enable Etsy merchants to expand their businesses.

These card readers have two features that set them apart from the pack, a group that includes Square, Intuit and Paypal. Features include automatic inventory adjustment after each sale and detailed electronic receipts with shop information so merchants and customers can connect with one another in an authentic manner after the sale.

This holiday season will serve as an interesting test of how merchants and shoppers respond to Etsy’s new offering.

 

Bottom of the News

Here are a few other articles about payments that are worth a read this month:

How Will Apple Pay Impact U.S. EMV (Bank Info Security)

Can Data Security Evolve as Fast as Cybercriminals? (PYMNTS.com)

And one from our own Russ Harty: What Apple Pay Means for the Channel (Business Solutions)