retail news in context, analysis with attitude

The New York Times reports on how various retailers are seeking alternatives to traditional payment options, at least in part because they'd like to save on billions of dollars in transaction fees, and also because worries about data breaches like the one that hit Target late last year. Among the choices cited in the story:

"The most immediate change will occur with EMV, the technology that uses an embedded chip to protect against counterfeit cards, and can also require a PIN to keep thieves from using stolen cards. " Target is speeding up the introduction of the technology (after having pretty much abandoned it several years ago), and both " Visa and MasterCard are pushing EMV technology, and have instituted new rules that say retailers will bear more fraud liability by the end of next year if they do not have the capability to process such cards. Some retailers are hoping that the move to EMV cards would lessen interchange and other processing fees, with more competitive and potentially cheaper networks that process PINs instead of signatures, or eventually from savings if fraud rates declined."

Starbucks is cited as an example as how a shift to mobile technology might work. "There," the Times writes, "customers can use their phone to pay for a latte or biscotti by loading money via the company’s app onto a Starbucks rewards card. The app entices customers to return with free drinks, and it keeps the lines moving quickly, all of which is good for business. It also saves Starbucks money, a spokeswoman said. Instead of paying for 10 cups of coffee individually, say at $1.75 each, customers can put $17.50 on their phone just once - which means Starbucks has to pay only one transaction fee, not 10."

Finally, "Several leading retailers, including Walmart, Target and Gap, have also banded together to form a group called the Merchant Customer Exchange, known as MCX, which aims to come up with a mobile payment system of its own. MCX would allow retailers to circumvent the credit card companies, tapping directly into customers’ bank accounts. Retailers said they would also then retain control of their customer data, rather than having to share it as they might if customers paid with a service like Google Wallet … But MCX, which was announced nearly two years ago, has yet to unveil a working product. MCX declined to comment or to provide an updated timeline."
KC's View:
One note … there is a Bloomberg BusinessWeek story saying that new poll suggests that only seven percent of shoppers plan to reduce shopping at Target in the coming year because of concerns about the breach. These results, the story says, "suggest Target may be able to regain the loyalty of customers after the theft of 40 million payment-card numbers by hackers."

This may be true. But I have to admit that I find myself thinking about the Target breach every time I slide my debit card, whether in a supermarket or at a gas station. I am not entirely persuaded that I'm the only one.