Market Overview

A Brewing Battle: Apple Pay Vs. MCX CurrentC

A Brewing Battle: Apple Pay Vs. MCX CurrentC

News broke over the weekend that Rite Aid Corporation (NYSE: RAD) and CVS Corporation (NYSE: CVS) had disabled Apple Inc.’s (NASDAQ: AAPL) Apple Pay mobile wallet payment system in their stores.

The story behind the story told of a mobile payment battle involving Apple, a number of retailers and the major credit card companies, all vying for a piece of the mobile payment pipeline.

Related: Is Apple Pay Safe?

Apple Pay

It all started when Apple Pay was unveiled about a week ago. The system, designed to work on Apple’s iPhone 6, would allow customers to use their smartphones to make payments at a number of retailers.

Neither Rite Aid nor CVS were among retailers that had an agreement with Apple, but until it was disabled, Apple Pay worked at both retailers’ locations.

MCX CurrentC

Although neither of the two retailers gave a reason for cutting off Apple Pay, analysts told The New York Times the disabling was a way to support a rival system under development by Merchants Customer Exchange (MCX).

Rite Aid, CVX, Best Buy Co., Inc., The Gap, Inc., Wal-Mart Stores, Inc. and a number of other major retailers belong to MCX, which is developing a mobile payments system set to premiere in 2015, called CurrentC.

Comparing Platforms

MCX CurrentC was designed to track customer shopping habits and has the potential to allow merchants to offer special deals and loyalty programs.

Apple Pay was designed with privacy in mind.

According to Bloomberg Businessweek, CurrentC would also come with the advantage of bypassing credit card companies by connecting directly to customer debit accounts. That could save merchants a lot of money in transaction fees.

The Apple system was set up to utilize MasterCard Incorporated, Visa Inc. and American Express Company as the transaction platforms, thereby setting in motion those dreaded transaction fees.

CurrentC would require customers to present a QR code to the merchant, who could scan it to complete the transaction.

Apple Pay is much simpler and does not involve QR codes or extra steps.

Related: MasterCard Beats on Q1 Earnings, Revs Up - Analyst Blog

Customer Concerns

As for Rite Aid, CVS and any other merchants that attempt to cut out Apple Pay, whether the move would work remained a question.

Patrick Moorhead, president of Moor Insights & Strategy told The New York Times, "Clearly Rite Aid and CVS are making a business decision over a customer satisfaction decision."

At the time of this writing, Jim Probasco had no position in any mentioned securities.

Posted-In: American Express Company Apple Inc. Apple Pay Best Buy Co. Bloomberg Businessweek CurrentCTop Stories Tech Best of Benzinga


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