This article has been updated to include additional information.
The pitch: cruise passengers wearing a quarter-size medallion leave their wallets safely behind and get 7% of their shoreside purchases “refunded” as an on-ship credit, while local merchants get increased visibility and trust in exchange for a 17.99% commission on sales (and 6% of gratuities).
For local merchants, along with city officials and others‚ it was a ball they had no intention of swinging at.
Princess Cruises announced Thursday their intention of expanding its MedallionPay program to Alaska is on hold indefinitely. The news was greeted with relief and thanks by critics who objected to everything from the commissions to a perceived suggestion Juneau is an unsafe place to carry cash.
“I’m so happy they made this decision, in the most genuine way,” said David Summers, owner of Alaska Knifeworks in the Merchants Wharf mall and a board member of the Juneau Downtown Business Association (DBA). He is among the most adamant opponents of MedallionPay, but said he doesn’t begrudge Princess exploring a potential money-making option as long as it ultimately responded appropriately to the feedback from those affected.
In addition to the commission Summers said is too high for merchants to make a profit and “nonsense” safety suggestion, the tracking of MedallionPay consumers and merchants to determine spending habits and favored locations is among his foremost expressed concerns. He said Princess could use such information to stock popular merchandise on board – thus depriving local merchants of sales – and put pressure on local non-participating businesses in high-traffic areas.
“It wouldn’t matter if it was free,” he said. “I wouldn’t do it.”
Vicki Johnson, head of communications for Princess, stated in an email that “MedallionPay is on pause in Juneau until there is better community understanding of this payment service and it is viewed by the community as a mutually-beneficial and positive service for Juneau.
“MedallionPay is designed to be an egalitarian and inclusive service that levels the playing field, benefits everyone, promotes the collective destination and eliminates challenges associated with conventional ‘shopping programs.”
Johnson also disagreed strongly with the perception of local merchants and officials that MedallionPay’s promotional material suggests traditional payment methods are unsafe.
“The reference to leaving wallets/credits onboard is misunderstood,” she wrote. “It was intended to highlight MedallionPay capabilities to guests and how easy it is use the Medallion to shop…not unlike using a mobile device to make a transaction using ApplePay or SamsungPay. Princess will not be recommending that guests leave their wallets and credit cards onboard.”
Princess announced their intention to bring MedallionPay to Alaska in a Feb. 1 news release, with company President John Padgett calling it “the ultimate in payment convenience and security for guests.” The cruise line has implemented the payment system for onboard purchases since late 2017, and subsequently brought it to ports including St. Thomas, Cabo San Lucas, Cozumel and Puerta Vallarta.
Alexandra Pierce, tourism manager for the city of Juneau, said local merchants told her a few weeks ago about the plans to bring MedallionPay to Alaska, and opposition ended up being expressed to the cruise company by city officials, the Juneau Chamber of Commerce, DBA and Travel Juneau in addition to local businesses.
“We’ve done a lot of work in this community to promote local businesses and make sure our businesses are getting the best benefits we can,” she said. “We were told by local businesses this was bad for them.”
“I really want to thank Princess for pausing the program, listening to the local concerns.”
Passenger reviews of MedallionPay are mixed in online forums and app stores, with many of the negatives coming from those encountering glitches ranging from crashes to failing to retain user information. A direct appeal for them to “please do NOT use MedallionPay” was made April 13 in a Cruise Critic chat forum post by Nate Vallier, DBA’s secretary and owner of Alaska & Yukon Tours.
“Businesses, especially here in Southeast, are also dealing with labor costs that are about 33% to 50% higher than normal, a seasonal workforce that is having a VERY hard time finding a place to live (which also means the places they CAN find are exorbitantly high), and many of us are also dealing with a new tax bill from the City of Juneau where most of our property taxes were nearly doubled this year (their claim is no annual assessments have been applied for years, so they decided to increase everyone’s values from 50% to 100% this year),” he wrote. “So every penny we can keep, as a shoreside business, really does affect our bottom line.”
A total of 113 posts were made in the forum before Thursday, when Vallier announced the program is on hold. Nearly all respondents expressed support for his plea, with some stating they weren’t aware of the merchant commission, but a commenter with the username MalteseFred wrote several posts arguing it’s an option that should be left up to individual businesses and passengers.
“Princess is NOT forcing the (original poster) or the other business into accepting MedallionPay,” MalteseFred wrote.
Vallier, in an interview this week, said he understands how “as a consumer it’d be amazing” to get a refund of sorts on purchases and that virtual pay systems are a likely future trend. He said he might also be more open to the concept as a merchant if the commission was lower.
“At 18% that wipes out the profit margin of most businesses in town,” he said. “You can‘t make that up in volume. Maybe 12-14 percent is more reasonable.”
But Summers said a lower commission doesn’t address his other concerns and, while the payment system is on hold at least through this year, he’s monitoring future plans.
“I think we need to keep a sharp eye out for programs like this trying to do a slow row forward under the radar,” he said.