A coalition of retailers is refusing to accept Apple's new mobile wallet because of agreements they have already signed with a competing mobile payment app's company,
CurrentC, which will not be available until next year.
Some of the largest companies in the United States are not yet accepting Apple Pay as a result,
reports The New York Times, including Walmart, Best Buy, and more than 50 other companies that belong to the Merchant Customer Exchange, or MCX.
CurrentC, like Apple Pay, connects directly with customers' bank accounts or store-specific credit cards, and will allow retailers to avoid high fees that come with credit card transactions, while more easily tracking their customers' spending patterns.
But as the retailers are under contractual agreements with MCX, they are not to accept competing mobile payment plans, including Apple Pay, anonymous sources told the Times, and if the contracts are broken, the retailers could face steep fines.
As a result, consumers who have tried to use Apple Pay in retailers that belong to the MCX system, including Rite Aid and CVS, have been unsuccessful and businesses are disabling technology that would support the Apple Pay program.
Other stores, like Walmart and Best Buy, have said for some time that they will not accept Apple Pay and even Target, which allows Apple for its online payments, does not accept the app in its brick-and-mortar stores.
Walmart
told Business Insider that it is not using Apple Pay because it is not widely accepted yet.
"Ultimately, what matters is that consumers have a payment option that is widely accepted, secure, and developed with their best interests in mind," a Walmart spokesperson said. "MCX member merchants already collectively serve a majority of Americans every day. MCX’s members believe merchants are in the best position to provide a mobile solution because of their deep insights into their customers’ shopping and buying experiences."
But the problem is more than just convenience of customers, although merchants can face some bad feedback if they continue to refuse Apple Pay. Tech companies are competing for what could eventually be a $90 billion mobile payments system by 2017, according to Forrester.
If retailers wait too long to pick a mobile payments app, they may miss out on customers altogether, experts say, as they may use their ability to pay with Apple Pay to other stores that accept it. Further, consumers may not be interested in using different products in various stores.
"These retailers are in a real jam," said Karen Webster, chief executive of the payments industry consulting firm Market Platform Dynamics. "The last thing merchants want is ticking off their consumers over payment."
CurrentC has been in the works since 2012, but was beaten to the punch by Apple Pay's release this year. It is designed to allow a mobile phone user to bypass using credit cards altogether by connecting directly into their bank accounts, and not only do merchants avoid high fees, but shoppers will avoid credit card interest payments.
"Retailers are looking for a combination of factors to adopt in stores," Mallory Duncan, senior vice president of the National Retail Federation, a retail advocacy group, told The New York Times. "And that includes if it delivers a good price to hold down costs for them and their customers."
But CurrentC critics say the system will likely be more difficult than Apple Pay, as it uses QR codes, a kind of barcode merchants scan to complete transactions. Apple Pay, however, allows shoppers to use near-field communications technology built in to all the Cupertino, Calif.-based Apple's new iPhone 6 and iPhone 6 Plus without being required to open an app or unlock their phones.
But while industry experts are excited over the mobile payments, some efforts have already dropped, including Google Wallet, which failed after its 2011 introduction, and PayPal's mobile wallet option, which is catching on with neither shoppers or retailers.
However, Apple has a wide influence of consumer behavior, and Webster said that when stores signed contracts with MCX years ago, they may have picked the wrong mobile wallet to join forces using.
"When these contracts were signed several years ago, no one knew about Apple Pay, or what mobile wallets were going to look like," Webster said. "It just didn’t have the same sort of consumer froth around it."
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Sandy Fitzgerald ✉
Sandy Fitzgerald has more than three decades in journalism and serves as a general assignment writer for Newsmax covering news, media, and politics.
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