Apple Pay, the mobile payment service of Apple Inc. (NASDAQ:AAPL) is facing a risk after CVS Health Corp (NYSE:CVS) and Rite Aid Corporation (NYSE:RAD), the two major pharmacy chain operator in the United States rejected the system.
According to Bloomberg Businessweek, the pharmacy chain operator removed Apple Pay and other mobile payment systems such as Google Wallet and Softcard. CVS Health Corp (NYSE:CVS) has not release any explanation regarding its decision.
On the other hand, Ashley Flower, the spokesperson for Rite Aid Corporation (NYSE:RAD) explained, “We are continually evaluating various forms of mobile payment technologies, and are committed to offering convenient, reliable, and secure payment methods that meet the needs of our customers.”
The real reason behind Apple Pay rejection
The Bloomberg Businessweek noted that convenience, reliability or security were not actually the primary reasons behind the rejection of Apple Pay. The media outlet said an increasing competition between credit card companies and group of merchants led by Wal-Mart Stores, Inc. (NYSE:WMT) is about to happen.
The retail giant along with CVS Health Corp (NYSE:CVS), Rite Aid Corporation (NYSE:RAD), Best Buy Co Inc (NYSE:BBY) and 50 other retailers are working on their own mobile payment system called CurrentC.
Apple Pay is designed to work with U.S. credit card companies such as American Express Company (NYSE:AXP), Visa Inc (NYSE:V) and Mastercard Inc (NYSE:MA).
On the other hand, CurrentC works independently without the credit card companies, which is more beneficial for retailers as they will no longer pay swipe fees (an average of 2% of the cost of transactions).
Currenct C is expected to enable retailers to gather data regarding transactions and offer loyalty programs to consumers. Such feature is in contrast with the anonymity built on Apple Pay.
The consortium of retailers has not release any specification about CurrentC, which is not expected to be ready until 2015.
Why mobile payment systems failed
Tim Cook, CEO of Apple Inc. (NASDAQ:AAPL) emphasized during the launching of Apple Pay that mobile payment systems failed citing the reason that they were built to serve the business models of their developed instead of providing useful experience to customers.
Meanwhile, Amazon.com, Inc. (NASDAQ:AMZN) supports Apple Pay. The customers of the e-commerce giant who are using its Visa Rewards card will be able to use Apple Pay soon.