Apple Pay Is Disabled by Rite Aid and CVS as a Rival Makes Plans

27 Oct 2014 | Author: | No comments yet »

A day buying things with Apple Pay.

Apple Pay, the Silicon Valley giant’s highly anticipated mobile wallet, has been available for only one week but already may be inciting a battle within the payments industry. US DRUGSTORES CVS and Rite Aid have disabled Apple Pay just one week after the iPhone payments system made its debut, reportedly in favour of an incoming QR code-based alternative.A worker uses Apple Pay inside a mobile kiosk sponsored by Visa and Wells Fargo set up to demonstrate the new Apple Inc. mobile payment system in San Francisco. 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.” 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. Apple has promised that its Apple Pay service can revolutionise the way we shop, replacing the normal credit card swipe with a tap of the phone and a fingerprint scan.

Apple Pay is a new digital wallet service that allows users to pay for goods using certain Apple devices that wirelessly communicate with point of sale systems using near field communication (NFC) antennas. Tech website MacRumors then reported that CVS joined them on Saturday, when it reportedly sent an email to all its employees instructing them that customers would no longer be able to pay using software like Apple Pay and Android’s Google Wallet. 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. This reads: “Please note that we do not accept Apple Pay at this time. “However we are currently working with a group of large retailers to develop a mobile wallet that allows for mobile payments attached to credit cards and bank accounts directly from a smartphone.

The drug retailers, which are part of a consortium developing a competing payment system, stopped Apple Pay last week, said a person familiar with the situation who asked not to be named. With a tour group of middle schoolers in front of me and retail workers on half-hour lunch breaks in back, it was the ultimate test for a payment method that’s supposed to cut down on time spent at the register. We expect to have this feature available in the first half of 2015.” Unlike Apple Pay, CurrentC requires the shopper to use a QR code on screen to complete payment, cutting out the credit card fees involved with mobile payments. Spokesmen for Woonsocket, Rhode Island-based CVS and Camp Hill, Pennsylvania-based Rite Aid didn’t respond to voice messages and e-mails outside of regular business hours.

McLaughlin added. “We look forward to them turning the functionality back on in their stores.” Apple has not released data on how popular its new product is. And with nothing to slide back into my wallet, I was able to move to the pickup counter so fast that the impatient man behind me hadn’t yet figured out his order. CurrentC enables merchants to monitor the shopping habits of its users, making it easier to target customers with loyalty programs using that kind of data. But on Apple Pay’s first day, at Chase banking services seven times more people added Chase credit cards to Apple Pay than signed up for new credit cards, Avin Arumugam, Chase’s digital executive director, said in an interview with Bloomberg. Hundreds of other retailers have backed the CurrentC system, including Gap, Old Navy, 7-Eleven, Kohls, Lowes, Dunkin’ Donuts, Sam’s Club, Sears, Kmart, Bed, Bath & Beyond, Banana Republic, Stop & Shop and Wendy’s.

Apple’s entry into mobile payments follows efforts by Square Inc., Google Inc. and Softcard — a wallet application backed by the three largest U.S. wireless carriers — that all failed to gain widespread appeal. Chief Executive Officer Tim Cook is trying to push Cupertino, California-based Apple into new businesses that further immerse users in the Apple digital ecosystem, which encourages repeat purchases over time. Apple has said the process is simple: Consumers only need to load a credit or debit card into the Apple’s wallet app called Passbook by entering the numbers or taking a picture of the card. In general, we found the experience was indeed pretty easy, though it had some key limitations, particularly which cards you could choose (sorry, no Amazon card yet).

This stands in marked contrast to the anonymity built into Apple Pay, which has drawn concerns even from some merchants who are actively supporting the system. The group’s system, called CurrentC, is in pilot tests in select locations across the country with plans for a national rollout next year, according to a statement on its website. Things also went smoothly at the Whole Foods in downtown Washington, D.C., apart from the fact that the cashier laughed when I plunked my enormous iPhone 6 Plus, a review unit on loan from AT&T, onto the card reader.

This is because the two companies installed NFC payment point of sales systems to support Google Wallet and other mobile payment services a couple of years ago. It partnered with the major banks and credit card companies — Visa Inc., MasterCard Inc. and American Express Co. — that Apple says account for more than 80 percent of U.S. credit-card purchases, allowing the iPhone maker to piggyback on their checkout systems. Over all, they represent more than $1 trillion in annual sales, 110,000 total stores and more than one-fifth of total United States retail sales volume, according to the coalition. It’s hard to argue that you’re doing right by your customers when you stop accepting a form of payment that you’ve already demonstrated presents no technical hurdles. Credit-card issuers are pushing U.S. merchants to upgrade their payment terminals within the next year to accept chip-based debit and credit cards, which are usually capable of handling near-field communications technology.

The product communicates with payment terminals equipped with so-called near-field communication technology at the checkout counter; currently more than 220,000 retailers accept this technology. As many as half of them aren’t operating because either merchant turned them off or the processor and infrastructure isn’t in place to support them, he said. To put that in perspective, that’s twice the gross revenue that a bank makes on a checking account.” At Panera Bread Co. (PNRA:US), which is experimenting with taking to-go orders through its app and replacing registers with tablets, a customer using Apple Pay would still have to hand the cashier her rewards card or recite her phone number to get a loyalty discount. “Obviously, that’s not where we want to be,” Blaine Hurst, Panera’s executive vice president for technology and transformation, told Bloomberg Businessweek. “Why can’t I just walk up to a cashier with my phone and all that information magically appears?” The phone beeped to let me know the chip had been read correctly, but it didn’t actually trigger anything on the screen or charge on my card; I still had to swipe to pay. And since MCX merchants are all working together, CurrentC could offer consumers enticing deals and loyalty rewards for shopping at any one of the dozens of participating stores.

The battle will surely escalate in the coming months as companies like PayPal and Google update their mobile wallet strategy to deal with the fast-changing market. But for now, many are betting on Apple Pay as the mobile wallet to beat. “Apple Pay is the most convenient, most secure, and what’s best for consumers,” Mr.

But the real hole in the service comes when you try to buy things through apps on a smartphone (Apple Pay doesn’t work on Web browsers since it requires a fingerprint scan). Choosing Apple Pay for Uber, meanwhile, actually adds a step because, rather than hitting a single button, you have to verify your fingerprint when you pay. Like its predecessors, it needs wider support to graduate from novelty to necessity — or at the very least, more consistent support before we can say the wallet of the future has arrived.

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