All signs point at a “marriage”, to quote Apple CEO Tim Cook, between Apple Pay and Jack Ma’s AliPay—both digital payments services. But what is interesting is the backdrop in which this partnership is fructifying. US-based retail chains Rite Aid and CVS have blocked Apple Pay in their stores, in favour of a under-development payments system by a retail consortium called Merchant Customer Exchange (MCX); both the retailers are part of MCX, which also includes retail behemoth WalMart.
While the retailers’ move is not illegal, there is every indication that it doesn’t work out in their favour. As per MasterCard and Visa data, cited by Cook, Apple Pay saw over a million credit cards being registered with it in the first 72 hours—and that number facilitates a greater number of transactions than all other contactless payments systems combined. With over 200,000 merchant locations enabled for Apple Pay—some of these belong to prominent retail chains—it is unlikely Apple Pay can be challenged. More so, given how it is anticipated by industry analysts that the number is only likely to grow. MCX members should also remember that there is little to gain by denying the consumer a choice. Forty-two per cent of American smartphone owners are iPhone users—nearly half of them will be able to use Apple Pay once they update their iPhones. Thus, by blocking Apple Pay, MCX would be outright excluding such a massive consumer base. The retail consortium is already handicapped in the sense that its payments service will be restricted to the US while Apple Pay is going to be global, and with an imminent partnership with AliPay, will have access to the second-largest economy in the world.