One week after making its debut in the market, Apple Pay, the new mobile wallet of the iPhone maker is showing promise as far as consumers are concerned. Meanwhile, the company’s rivals in the payment industry are scrambling to prevent this new product from becoming too successful. Even before the announcement of Apple Pay, a group of retailers announced their refusal of accepting it in their respective stores. This coalition comprises of more than 50 companies, which has been given the name of MCX or Merchant Consumer Exchange. It includes prominent names such as Best Buy, Walmart and Gap Inc.
It isn’t that these retailers don’t want a mobile wallet to become popular with the customers. In fact, they realize that a mobile wallet can also help retailers because it aids them in understanding the shopping habits of their customers and also be useful in avoiding the high fees that merchants have to pay when credit card transactions are processed. The reason for their opposition is that they are working on the Current C, a competitor of Apple Pay. This is a mobile wallet app that will direct connect to the bank account of consumers or to the credit card specific to the store. However, this competitor will not be introduced until next year.
According to several retailers who are involved with MCX, the terms of their contractual agreement dictate that they cannot accept payments from a competing mobile payments product. Thus, if the contract is broken, steep fines will have to be paid by the retailers and that’s something they wish to avoid. Since the introduction of Apple Pay last week, consumers have tried using this mobile wallet in CVS and Rite Aid, which are also MCX members so they have disabled the technology that supports this mobile payment system.
For weeks, Best Buy and Walmart have continued to state that they will support payments via Apple Pay. Even Target, the partner of Apple Inc. for online payments has refused to accept payments in its stores that are made through Apple Pay. The future of how payments are made by the consumers is at stake and credit card businesses, technology companies and retailers are all fighting for getting a piece of what could possibly be a $90 billion payment market. However, the clock is ticking. If Apple Pay is indeed successful, the MCX retailers waiting for their competing product would be missing out on countless mobile payment transactions.
Consumer resentment could also raise its head if merchants constantly refuse to accept Apple Pay. Furthermore, if Apple Pay does become popular, consumers will not be interested in a rival product. According to analysts, retailers are in a tough fix because they don’t want to tick off their consumers. CurrentC was first announced in 2012 as an effort of merchants for building the ideal mobile wallet. Rather than linking to a credit card, it has to be linked directly to the customer’s bank account. This move is considered strategic as credit card companies could be bypassed in this way.