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The mobile payment wars have just begun

Apple launched its Apple Pay wireless payment service last week to much fanfare. Apple Pay allows iPhone 6 and iPhone 6 Plus users to make quick, secure payments using their stored credit cards.
 
Speaking at the WSJ.D conference in Laguna Beach, California yesterday, Apple CEO Tim Cook noted that over one million credit/debit cards were activated using Apple Pay within its first 72 hours of availability.
 
"The early ramp looks fantastic," said Cook.
 
However, iPhone 6/iPhone 6 Plus users ran into a bit of a snag over the weekend when CVS and Rite Aid pulled their unofficial support for Apple Pay by disabling the NFC capabilities in their registers. This action had the side effect of also disabling Google Wallet transactions.

 
CVS and Rite Aid are both part of the Merchant Customer Exchange (MCX), which is working on its own competing wireless payment service, CurrentC. CurrentC bypasses the credit card companies altogether — thus saving retailers on the roughly 2 percent processing fee from credit card transactions — and instead has a direct line to the customer’s bank account.
 
"It's a skirmish, that's the way we see it," noted Cook during the WSJ.D interview. "I think that over the long arc of time, retailers will step back. Merchants have different objectives some times, but in the long arc of time, you're only relevant if customers love you."

 
Walmart, the largest merchant in the MCX consortium, released the following statement to Business Insider about the current “skirmish”:
 
There are certainly a lot of compelling technologies being developed, which is great for the mobile-commerce industry as a whole. Ultimately, what matters is that consumers have a payment option that is widely accepted, secure, and developed with their best interests in mind. MCX member merchants already collectively serve a majority of Americans every day. MCX’s members believe merchants are in the best position to provide a mobile solution because of their deep insights into their customers’ shopping and buying experiences.
 
It’s clear that the MCX merchants see Apple Pay as “more of the same” considering that it would still have to pay processing fees (even if the process of using Apple Pay is easier for customers), so it shouldn’t be too surprising that they favor a system that would potentially save them billions in the long run.
 
As to how CurrentC will fare in the marketplace amid tough competition, Walmart CEO Lee Scott bluntly told retail-banking analyst Ron Shevlin, “I don’t know that it will, and I don’t care. As long as Visa suffers."

Walmart has been battling for years over what it sees as monopolistic credit card processing fees, and earlier this year dropped out of a multi-billion dollar antitrust settlement with Mastercard and Visa to file its own lawsuit against Visa.

Sources: Business Insider, The Verge





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