Following the excitement over the introduction of Apple Pay, the conspicuous absence of Walmart and Best Buy in its launch led to several second-day stories exploring the challenges the new mobile payment system faces.
Apple Pay will be launched in October at Apple Stores and other retailers representing more than 220,000 stores in the U.S., including Disney Store, Macy's, McDonald's, Nike, Petco, Staples, Subway, Toys "R" Us, Target, Walgreens and Whole Foods. But news that the largest retailer as well as the largest consumer electronics chain are not planning to adopt Apple Pay led to further concerns about adoption by other — smaller — retailers.
The reasons given for the potential hesitancy by other stores to use Apple Pay were:
Cost: NFC (near-field communications) readers required to accept Apple Pay range from $300 to $500 per device. Best Buy installed NFC-enabled scanners years ago but switched them off in 2011 due to the costs involved. The cost hurdle will be higher for smaller stores. While fewer than 10 percent of retailers have NFC-enabled POS terminals, stores are said to be waiting for greater consumer demand to justify the investments.
Mobile-payment competition: Walmart and Best Buy are supporting CurrentC, a mobile payment system being developed by a network of retail store chains called Merchant Current Exchange (MCX). CurrentC is scheduled to launch in 2015. Also endorsed by Target, 7-Eleven, Southwest Airlines, the Gap and Shell gas stations, CurrentC promises to help retailers avoid "swipe" fees. It also only requires a software download rather than an NFC-enabled terminal. Finally, CurrentC promises to work with existing iPhones and Android devices while Apple Pay only works with the latest generation iPhones or the Apple Watch.
Slow change: With little traction being gained by Google Wallet and other mobile pay options, consumers have shown they're reluctant to use mobile payment. With the chip-and-pin technology necessary for NFC already commonplace in Europe, U.S. retailers have also proven to be cautious around mobile pay rollouts. Having multiple mobile pay options will also slow overall acceptance.
For Apple, the upside is that banks are pushing retailers to upgrade their POS systems for security reasons and POS terminals are expected to soon be NFC-payment ready regardless. Apple Pay is also expected to be more secure than the QR code used by MCX. With Target among those supporting both Apple Pay and MCX, other retailers may decide to use both systems.
Ultimately, many Apple enthusiasts believe mobile payment will be consumer-driven. And if Apple was able to bring touch screen technologies and MP3 downloads to the world, they'll be able to convince consumers to use mobile payments.
"You start to build the habit and then that's what builds the tipping point," Silvio Tavares, chief executive of the CardLinx Association, a payments industry group, told The Wall Street Journal. "If anyone can do it, Apple can."
- Will Stores Warm Up to Apple Pay? - The Wall Street Journal (sub. required)
- Retailers seen unlikely to warm up to Apple Pay - Reuters
- Clash of the titans: Wal-Mart rejects Apple Pay to pursue a competing mobile payment system - The Washington Post
- Apple Pay? Wal-Mart and Best Buy look other way - Tech Times