Wal-Mart and allies in face-off with Apple Pay over mobile payments
By Nathan Layne and Nandita Bose
CHICAGO (Reuters) - Suddenly it's Apple versus Wal-Mart in the fight for shoppers' digital wallets.
With the development of a new mobile payment system, a group of retailers led by Wal-Mart Stores (WMT.N: Quote) is aiming to upend the $4.5 trillion credit card market and control the precious transaction data generated at the checkout line.
The difficulty of the task became clear this week when drugstore chains CVS Health Corp (CVS.N: Quote) and Rite Aid (RAD.N: Quote), in a move apparently aimed at shoring up the retailers' pay system, stopped accepting payments on Apple Inc's (AAPL.O: Quote) iPhones. That prompted consumers to complain that they were being denied a user-friendly payment option.
The “skirmish,” as Apple CEO Tim Cook put it this week, is the latest dispute to emerge from the Byzantine world of payment systems, which is dominated by banks and credit card firms.
Many payment experts said they are skeptical that the retailer-backed system, known as CurrentC, can gain traction, let alone thwart Apple Pay, a payment system launched by the iPhone maker last week. CurrentC is set to go live in 2015.
The retailers' main objective appears to be to push credit card companies out of the payment equation, or at least get them to lower their costs.
"CurrentC is built for retailers, to help them cut out interchange fees," said Nick Aceto, senior director at payment technology firm CardConnect, referring to the fees paid by retailers to credit card companies when a shopper makes a purchase. "It's not a solution that will appeal to customers because it does not make their lives any easier."
That's not stopping the retailers from trying, and their consortium, the Merchant Customer Exchange (MCX), has clout, with $1 trillion in annual sales. In addition to Wal-Mart, its members include Best Buy Co (BBY.N: Quote) and Target Corp (TGT.N: Quote). Continued...