Last Thursday drug store chain Rite Aid Inc. reportedly stopped accepting payments made through Apple’s new pay system. On Saturday, CVS Health Corp. was reported to have followed suit at its CVS pharmacy stores.
“The issue appears to be a conflict between Apple Pay and a mobile payment system called CurrentC that is being developed by a retailer-owned mobile technology outfit called Merchant Customer Exchange (MCX),” The Huffington Post reports.
“Unlike Apple Pay, CurrentC does not use an NFC chip, but instead generates a QR code that is displayed on the merchant’s checkout terminal. Customers who have already linked their bank accounts to the CurrentC system scan the QR code from the terminal and the transaction is completed.”
When the Cupertino-based tech giant announced Apple Pay in early September, both Wal-Mart Stores Inc. and Best Buy Co. Inc. said they had no plans to adopt the new system. Both are partners in MCX along with other major retailers like Target Corp., Darden Restaurants Inc., and Sears Holdings Corp.
MCX has been working on a mobile payment system for the last four years already, and the driving force behind the effort was to enable the merchants to avoid paying the 2% to 3% credit card transaction fees charged by the likes of Visa and MasterCard.
How much do these big retailers dislike paying fees to Visa and MasterCard? Former Walmart CEO Lee Scott is reported to have said, “I don’t know that MCX will succeed, and I don’t care. As long as Visa suffers.”
Apple’s new payment system was predicted to boost sales of the recently unveiled iPhones.
Apple shares increased by 1.3 percent a day after the launch of the highly expected iPhones and Apple Watch – the first new product introduced by Chief Executive Tim Cook who noted that most consumers and businesses still rely on a “fairly antiquated payment process,” and one that isn’t as secure as many would hope.
“We’re totally reliant on the exposed numbers,” Cook said in the presentation, “and the security codes that all of us know aren’t secure. It’s no wonder that people have dreamed of replacing these for years. But they’ve all failed.”
“At least six brokerages raised their price target on Apple’s stock by as much as $16 to a high of $116, but there was also a rare downgrade to the stock”,Reuters writes. “Many on Wall Street hailed Apple Pay – the company’s new wireless payment system – with Piper Jaffray’s Gene Munster calling it the “star of the show” at Tuesday’s gala launch.”
Samsung Electronics Co Ltd, Motorola Mobility and others have similar wireless technology in many Android smartphones. But with payment systems such as Google’s Wallet failing to catch on, the technology is not standard in handsets.
“On the mobile payments front, we believe the company made a major breakthrough and cracked an important and vexing issue that has plagued the industry for several years regarding customer ownership,” William Blair analysts wrote in a note at the time.