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Are retailers making a mistake not accepting Apple Pay?

Written by George Anderson

In a previous RetailWire discussion, we asked if Apple Pay's success will rely on the participation of retailers that are part of the Merchant Current Exchange (MCX) consortium. But what about those retailers? Do they need Apple Pay?

It's not difficult to understand why retailers that are part of MCX would want to give preferential treatment to the mobile payment system (CurrentC) they are in the process of testing and rolling out. But are they helping their cause by preventing customers from using Apple Pay who would like to do so?

Numerous reports have been published about chains including Walmart, CVS and Rite Aid that are not accepting Apple Pay. The conclusions of various articles on the subject are:

A. Apple Pay could greatly help the adoption of mobile payments by consumers.

B. MCX retailers are primarily interested in eliminating fees charged by the credit card companies for transactions, so they are willing to ignore the wishes of customers who want to use Apple Pay.

Retailers have argued for years that reducing fees they pay to credit card companies would ultimately benefit consumers in the way of lower prices. Of course, card companies have replied that being forced to reduce the fees they charge to merchants would necessitate those charges being moved to consumers.

Ron Shevlin, senior retail banking analyst at Aite Group, is not a believer in CurrentC. In a blog post, he wrote that the cost of driving adoption will ultimately offset any reductions in fees that merchants obtain.

Mr. Shevlin also wrote that he had asked former Walmart CEO Lee Scott if he believed MCX and CurrentC would succeed. Mr. Scott said, “I don't know that it will, and I don't care. As long as Visa suffers.”

A Gizmodo article suggests that MCS member stores that turned off the near-field communications needed to accept Apple Pay may have been required to do so as part of an exclusivity agreement signed as part of membership.

One thing is clear, Americans like having payment choices — cash or plastic, debit or credit, Visa or MasterCard, etc. Telling consumers they cannot use a preferred form or payment, be it Apple Pay or any other mobile option, could result in people choosing one store over another.

"It could get ugly for CVS and Rite Aid if consumers are asking for Apple Pay," Patrick Moorhead of Moor Insights & Strategy, told USA Today.

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