Although Apple Pay, Apple’s new secure and simple payment system, has already shaken up two large merchants, despite the fact that it works only on iPhone 6 and iPhone 6 Plus and has been available only one week.
Both Ride Aid and CVS have blocked the payment system on their terminals, even though Apple Pay was working seamlessly at the two companies.
From the New York Times:
Ashley Flower, a spokeswoman for Rite Aid, said the company “does not currently accept Apple Pay.” She added that Rite Aid was “still in the process of evaluating our mobile payment options.”
Representatives from CVS did not respond to repeated telephone and email requests for comment on Sunday.
Analysts said disabling acceptance of Apple Pay was a way to favor a rival system that is not yet available but is being developed by a consortium of merchants known as Merchant Customer Exchange, or MCX. Rite Aid and CVS are part of that consortium, not part of the group of retailers that had teamed up with Apple on its payment system. Nonetheless, over the week, Apple Pay technology was working in Rite Aid and CVS stores.
“Clearly Rite Aid and CVS are making a business decision over a customer satisfaction decision,” said Patrick Moorhead, president of Moor Insights & Strategy.
Methinks there is fear in the land among those who want to create their own payment systems. The MCX system tracks users purchases across merchants and will be used by merchants to follow consumers by name. By contrast, Apple Pay is totally secure and merchants cannot follow or record specific purchases. Apple Pay essentially works like cash, albeit through a credit card.
Also from the Times:
A great deal is at stake. MCX’s payments system helps merchants keep track of customer shopping habits across the dozens of merchants who plan to accept the payment product. That is a potential treasure trove of data for retailers, who wish to better target consumers with deals and loyalty programs.
This also gives retailers the potential ability to cut credit card companies out of the payments process entirely. MCX’s system, CurrentC, will be linked to a consumer’s debit account, according to the company’s description of the product. By bypassing credit card companies, MCX merchants could potentially save money on the fees they pay per transaction.
The fact of the matter is that Apple Pay is simple for users, secure for banks and merchants, and it will eventually win out. The last thing I would ever do would be to allow a merchant access to one of my debit cards.
Disclosure: I am long AAPL.