American retailers appear to have gone to war against Apple’s new mobile payments system, Apple Pay, and Apple is losing.
Wal-Mart, Best Buy, Rite Aid, and CVS have all said they want nothing to do with the system (or Google Wallet, for that matter). The latter pair tried it and then disabled it over the weekend.
Apple is hanging on to a tiny gaggle of corporate partners. As described by the Verge, it sounds bleak:
A quick look at Apple’s website explaining the service highlights just 34 retail partners that support the system. Eight of those are different flavours of Foot Locker. One is Apple itself.
So that’s basically just 25 companies, not including Apple.
It’s an early battle, so it is premature to say who will win in the long run. Apple appears to have created an ingenious and obviously superior mobile payments system. But retailers control their own checkouts — they get to say who pays with what, not Apple. And Wal-Mart, the world’s largest retailer, is backing the retailers’ system via a company it is partnering with called MCX.
The retailers don’t want Apple to monopolize a system that will produce a lot of valuable customer data. Their system, “CurrentC,” will let them keep that data.
Apple Pay is an elegant, universal, simple-to-use system that can be used by any retailer. You just touch your finger on the iPhone Touch ID fingerprint scanner, wave your phone near the NFC checkout device at the store, and approve the payment.
What Apple gets and what no one else in the industry does is that using your mobile device for payments will only work if it’s far easier and better than using a credit card. With CurrentC, you’ll have to unlock your phone, launch their app, point your camera at a QR code, and wait. With Apple Pay, you just take out your phone and put your thumb on the Touch ID sensor.
Apple’s system works with any credit card you want to punch into the system. Apple Pay basically partners with, and sits on top of, the existing credit-card system and makes credit cards super-easy to use by funelling payments securely through your phone. It shields data from retailers, too — which is why Wal-Mart et al. don’t like it.
The retailers’ CurrentC system does something similar, but without the fingerprint and without the one-step approval. You have to scan things and punch in codes to make the payment. The advantage of CurrentC is that it automatically applies discounts and coupons to your purchase, so consumers are heavily encouraged to use it. It also funnels a ton of data to retailers. And it has about 60 companies on board.
So in the long run, the fight will be between Apple’s system, which is simple and works universally as any credit card, and Wal-Mart’s system, which is complicated and works only when a store agrees to adopt it.
That’s why, even though it looks as if the Apple Pay launch is in tatters, you shouldn’t assume that Apple has lost the war.