Now We Know The Truth About Why CVS And Rite Aid Blocked Apple Pay
REUTERS/Shannon Stapleton Rite Aid quietly blocked Apple Pay last weekend. We now have a better idea why Rite Aid and CVS quietly pulled support for Apple Pay last weekend, even though the retailers initially accepted the new payments system.
Rite Aid and CVS are members of the Merchant Customer Exchange (MCX), a group of big retailers that includes Target and Wal-Mart. But MCX is making its own payments app, called CurrentC.
According to The New York Times , if a retailer like Wal-Mart decides to accept Apple Pay, this would constitute breaking its contract with MCX, and it would "face steep fines for doing so." That means retailers agreed not to use anything but MCX's mobile payments system when they joined the group. According to The Times' report, these agreements were made long before Apple Pay was launched.
MCX's CEO, Dekkers Davidson, responded to the controversy in a blog post on the company's website Wednesday.
The post says MCX merchants must work exclusively with MCX, implying that alternative payments systems aren't allowed. However, it sounds like MCX members can leave the group if they want to pursue another payments system like Apple Pay.
Here's that portion of Davidson's statement:
When merchants choose to work with MCX, they choose to do so exclusively and we’re proud of the long list of merchants who have partnered with us. Importantly, if a merchant decides to stop working with MCX, there are no fines.
However, there are still some lingering questions. MCX's statement isn't clear on the length of a retailer's contract with MCX, and what happens if that retailer decides to opt out within that time period.
We reached out to MCX for more information.
Even if there isn't any sort of fine, retailers are still in a tough spot.
With consumers online calling for boycotts of stores refusing Apple Pay in favor of CurrentC, MCX retailers will risk angering customers by intentionally disabling Apple Pay, and with CurrentC still months away from launching. That could turn into a huge gamble.
According to sources familiar with CurrentC's plans, the app will only allow you to use your checking account to make payments. Credit-card companies have no desire to partner with CurrentC in its current form, our sources say. This is likely because MCX retailers are trying to avoid the fees they have to pay to credit-card companies with each transaction.
Eventually, MCX retailers will have to weigh the benefits of sidestepping credit-card transaction fees and gaining access to CurrentC's treasure trove of customer data against benefits of defecting to avoid customer blowback by allowing Apple Pay.
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