Apple Pay faces challenge as two drug stores reject it

Written by New York Times | Updated: Oct 28 2014, 08:16am hrs
Apple Pay, the Silicon Valley giants highly anticipated mobile wallet, has been available for only one week but already may be inciting a battle within the payments industry.

Over the weekend, Rite Aid and CVS disabled Apple Pay from working in their stores in the US. The reason was not immediately clear.

Ashley Flower, a spokeswoman for Rite Aid, said the company does not currently accept Apple Pay. She added that Rite Aid was still in the process of evaluating our mobile payment options.

Representatives from CVS did not respond to repeated telephone and email requests for comment on Sunday.

Analysts said disabling acceptance of Apple Pay was a way to favor a rival system that is not yet available but is being developed by a consortium of merchants known as Merchant Customer Exchange, or MCX. Rite Aid and CVS are part of that consortium, not part of the group of retailers that had teamed up with Apple on its payment system. Nonetheless, over the week, Apple Pay technology was working in Rite Aid and CVS stores.

Clearly Rite Aid and CVS are making a business decision over a customer satisfaction decision, said Patrick Moorhead, president of Moor Insights & Strategy.

He added that the move could upset consumers who believe Apples new product is easier and safer than paying with a traditional credit card.

Apple declined to comment on the stores action. An executive at MasterCard, which has teamed with Apple on its new system, said Rite Aid and CVS made the wrong decision.

We think consumers should have the ability to pay any way they want, said Ed McLaughlin, chief emerging payments officer at MasterCard. Rite Aid and CVS have been accepting contactless payments for quite a long time, he added.

Apple has not released data on how popular its new product is. A great deal is at stake. sales Technology companies like Google and PayPal, as well as mobile carriers like Verizon and AT&T, have all tried and failed to persuade consumers to pay for things with their smartphones.But many believe that if any company can gain consumer adoption quickly, its Apple. Apple Pay works only with iPhone 6 and 6 Plus. devices.