Apple Pay, CurrentC, and the Normalization of Credit/Debt


How do payment technologies like Apple Pay, CurrentC, and credit cards affect our lives as consumers?

Paying for stuff has just gotten easier with Apple Pay - or so it seems. Apply Pay is a wireless payment system that lets owners of iPhone 6 pay for goods at retailers with wireless payment terminals. Users put their phones near the payment terminals, put their thumbs on the Touch ID button, and the transaction is complete.

This week, however, some US retailers have started disabling their NFC systems to prevent people from using Apple Pay, Google Wallet or any other NFC based payment system. These retailers promote their own payment system Called CurrentC. CurrentC relies on QR code scanning to process a consumer's payment. Payments are not linked to a credit card account but pulled automatically from the bank account linked to the user's account via Automatic Clearing House (ACH) transactions.

For most commentators, Apple Pay is a completely seamless, intuitive, and unobtrusive innovation that empowers consumers. CurrentC, on the other hand, is viewed as just another clunky, entirely unethical and anti-competitive consumer nightmare. Consider tech blogger John Gruber

"What Apple gets and what no one else in the industry does is that using your mobile device for payments will only work if it's far easier and better than using a credit card. With CurrentC, you'll have to unlock your phone, launch their app, point your camera at a QR code, and wait. With Apple Pay, you just take out your phone and put your thumb on the Touch ID sensor."

However, arguments such as John Gruber's not only reinforce the US cultural legacy of abundance and related idealizations of technology as an enabler of consumer freedom. They also easily ignore how existing patterns of power relationships in the US financial system have affected American society on a deeper sociological level. 

With upwards of 522 million Visa cards and 551 million MasterCards in circulation in 2013, Visa and MasterCard have created an infrastructural monopoly. This duopolistic Visa-Mastercard hegemony has not only created a huge invisible tax on the economy of around $50 billion a year (Nielsen). It has also contributed to what consumer researchers Lisa Peñaloza and Michelle Barnhart call "the normalization of credit/debt" among American middle class consumers (Journal of Consumer Research). 

From this perspective, financial instruments such as credit cards, pay day loans, loans on car titles, loans on income tax refunds, and subprime mortgages have led to a profound shift in consumers' self-understandings as financial decision makers. Whereas previous generations of Americans viewed credit/debt as an invitation to exercise self-discipline and as a threat, contemporary American consumers are actively encouraged to view credit as a way to be independent, to express freedom, to indulge in consumption, and to show patriotism. 

In this climate, many consumers have learned to successfully leverage credit cards provided to them by firms in ways that benefit each. However, the necessity to have credit to consume normally and the idea that taking significant financial risks (even if one lacks the funds) is not a sign of foolishness but rather a great way to help keep the economy afloat and to showcase one's patriotism and entrepreneurial mindset have also made credit/debt matters of national security that threaten families and firms and jeopardize the national economy. 

Analyses of payment systems like Apple Pay or CurrentC should take these larger sociological dynamics into account. Consumer researchers Peñaloza and Barnhart, for one, "rally firms to more proactively and evenly institute feedback to consumers and to do so prior to their constitution of the punished consuming subject position." 

In this light, CurrentC may not only help merchants avoid paying the approximately 2 to 3 percent fee levied by credit card companies. Linking payments to a debit account may also be a feedback mechanism that socializes consumers into a new payment ethos that emphasizes risk-avoidance and that has the potential to reduce consumer vulnerabilities especially during life transitions such as college, marriage, divorce, children, illness, retirement, and job loss.

Markus Giesler

Markus Giesler draws on concepts from economics, technology studies, and sociology to inform his research in marketing. He determines how ideas and things (products, services, experiences, technological innovations, intellectual property, brands, etc.) are made valuable over time, with research focused on improving marketing strategy through an understanding of markets as evolving social systems. Giesler's research has been supported by the Social Sciences and Humanities Research Council of Canada (SSHRC) and the European Research Council (ERC) and published in top-tier academic journals such as the Journal of Consumer Research and the Journal of Marketing. Giesler has an extensive entertainment industry background. He founded his own record label at age 17 and has worked in various production and marketing responsibilities for over a decade. He lives in Toronto, Canada.