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Apple Pay is endorsed by some, shunned by others

November 6, 2014

Since the introduction of Apple Pay to the market, consumers have embraced the mobile payment system, while a few big retailers have opted not to endorse it.

Since the introduction of Apple Pay to the market, consumers have embraced the mobile payment system, while a few big retailers have opted not to endorse it.

Merchants disable their NFC scanners
CVS and Rite Aid recently disabled their NFC scanners and stopped accepting Apple Pay. The two companies are part of a group, which also includes Wal-Mart and Best Buy, that is working on its own mobile payment system called CurrentC.

Critics believe some retailers and merchants are reluctant to embrace Apple Pay because it will mean less fees for them. Businesses pay interchange fees to credit card companies when customers make purchases with their cards. Fees typically range between 1 and 3 percent of the transaction value, reported The Wall Street Journal. 

Merchants benefit more from cash payments and sometimes offer discounts for purchases made with cash. CurrentC, which experienced a data breach last month, is similar to cash payments in that it avoids interchange fees. The mobile payment system developed by retailers allows customers to pay with their personal checking accounts or retailer-backed cards and uses a QR code on a mobile phone to be read at checkout. CurrentC is currently in the process of being tested in some markets.

Jerry Kim, an assistant professor of management at Columbia Business School, explained why merchants enjoy purchases that do not involve fees to credit card companies.

“What merchants want is to lower their costs. If you are Wal-Mart, cutting costs by even 1 percent has a tremendous impact on your bottom line,” said Kim, according to the news source.

CVS and Rite Aid have not provided sufficient comment about their decision to disable near field technology, which is required by Apple Pay.

“Given that we are still in the process of evaluating our mobile payment options, Rite Aid does not currently accept Apple Pay or other payment systems that use NFC technology,” the company said in a statement.

CVS also made a general statement that it cannot accept mobile payments that use NFC technology, but did not explain why.

Consumers wanted to use Apple Pay
Many consumers were upset by the recent move by retailers because they wanted to use Apple Pay at their stores. Some customers immediately went to Twitter to post their complaints.  Apple Pay is expected to be very popular with consumers and over one million credit cards were registered with the service within 72 hours of the mobile payment system being made available. Apple Pay allows users to buy products by simply tapping their phones on an NFC enabled point of sale device at retailer and merchant locations.

Fox Business reported on instances where small businesses expressed their interest in Apple Pay. Michael Cruz, office manager for a Las Vegas-based private dental practice, said that they enabled Apple Pay a few days after the technology was introduced. They simply switched to NFC scanners and began accepting payments. 

“I would recommend accepting Apple Pay if it doesn’t cost you anything to do it … Offering your customers multiple ways to pay is always a convenience for them, and offering Apple Pay shows that your business is staying up to date with technology,” Cruz said, according to the news source.

Similarly, one seller of point-of-sale systems, based in san Francisco, decided to offer Apple Pay after seeing a high level of interest in the mobile payment technology from its customers. Co-founder Chris Ciabarra commented that if customers want something, it is advisable to do it.

“We do what the client wants … They think it’s going to boost their business,” Ciabarra said, according to Fox Business.

Ultimately, what consumers want will dictate what happens in the mobile payment industry going forward. Today, it seems that customers want Apple Pay. It would benefit retailers to reconsider their CurrentC system and allow their client base to pay in whatever way they want.

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