Apple Pay just went live on the 20th, but already it has caused rifts to develop between Apple, retailers and banks. This weekend, CVS and Rite Aid shot down NFC support in their stores, joining retailers Best Buy and Walmart, which never supported the service.
The problem seems to be a conflict between Apple Pay and CurrentC, a mobile payment system that is being developed by a retailer-owned technology company called Merchant Customer Exchange (MCX), the Huffington Post reported. CurrentC does not use an NFC chip like Google Wallet and Apple Pay but instead generates a QR code that is displayed on the checkout terminal. Customers who have linked a bank account to CurrentC scan the QR code to complete the transaction.
QR codes are considered somewhat clunkier than NFC technology, and easier to hack. Alipay was a pioneer in the use of QR payments in China until hackers began inserting Trojan horses into the codes, prompting the Chinese central bank to step in and order the discontinuation of the technology, Fortune reported.
Walmart and Best Buy said they would not adopt Apple Pay when it was announced in September. Both companies are partnered with MCX, as well as retailers like Target and Sears.
MCX has been developing its mobile payment system since 2011 to allow merchants to avoid the 2-3% credit card transaction fees charged by Mastercard and Visa.
[quote text_size=”small” author=”– Lee Scott” author_title=”Former Walmart CEO”]
I don’t know that MCX will succeed, and I don’t care. As long as Visa suffers.
[/quote]
CurrentC will work with existing checkout terminals, unlike Apple Pay, which requires retailers buy or use equipment that communicates with the NFC chips in the iPhone 6 and iPhone 6 Plus, USA Today reports. CurrentC is expected to go live in early 2015.
The mobile payment industry is expected to climb to $90 billion in three years from $12.8 billion in 2012. This decision by Rite Aid and CVS is likely the beginning of a battle in the mobile payment system.
Credit card issuers, meanwhile, are pushing merchants to upgrade payment terminals by next year to accept chip-based cards, which are typically able to handle NFC technology. The deadline for the switch is October 2015. So far, just 220,000 stores in the U.S. have made the switch out of 10 million. Average upgrade costs are $500 to $1,000 per terminal, Bloomberg reported.
