Apple (News - Alert) Pay, so far, has proven to be quite welcome among consumers, a cause for significant concern from competitors, and from retailers, a mixed bag at best. While Apple CEO Tim Cook was overheard just recently declare the resistance to Apple Pay shown by CVS to be “a skirmish,” this is one skirmish that's turning into a downright imbroglio, thanks to the rise of a major competitor as well as a primary source of using such a system, the Merchant Customer Exchange (MCX).
The MCX is made up of a body of better than 50 retailers—including major names like Best Buy (News - Alert), the Gap, and Walmart—who will not accept Apple Pay in the relevant brick-and-mortar storefronts. This would be a blow under any normal circumstances, but in this case, the problem for Apple is actually two-fold: one, these companies won't allow Apple Pay in the operation, and two, these companies are actually concocting a mobile wallet system to compete with Apple Pay known as CurrentC—a play on the word “currency.”
Reports suggest that, indeed, the merchants that make up the MCX aren't particularly opposed to the mobile wallet—retailers learn more about customer habits when a mobile wallet is used, and cutting credit card companies and attendant fees out of the equation is a welcome proposition for many—but the MCX would rather have its own mobile wallet system in play rather than let Apple step in and take fees that could be going to the MCX instead. But CurrentC won't be available until 2015, and a contractual agreement between the firms in the MCX keeps said firms from accepting competing mobile payment products. Steep fines, according to reports, are also connected with breaking this agreement, and that leaves MCX member organizations in something of a bad position.
With a total market estimated in the $90 billion range, there's quite a bit at stake here for companies who get this right, or fail to. While mobile payments are still a young industry, even in the United States, the sheer potential mass of the market could turn this into a make-or-break proposition for many stores, already feeling the effects of a still-limping economy.
But here, the merchants of the MCX are likely starting to sweat. Apple Pay is already catching on, to the tune of better than a million cards activated in the first 72 hours of operation. That's one monster customer bloc, and it's likely growing still further. No company can afford to annoy a major coalition of customers for very long, not even the retail titan that is Walmart; if the MCX can't get an alternative together—and quickly—it risks the unpleasant choice of either having to accept Apple Pay for the sake of the customers that want to use it, or having to turn it away and with it the customer load. Worse, some MCX members may end up cheating, or leaving the organization outright, just to be able to accept Apple Pay and keep already fickle customers happy.
If the MCX expects to keep this position against Apple Pay up for any length of time, it must have CurrentC online as soon as possible. It would have been better had it been ready for the Christmas shopping season—much more delay than has already been seen may well spell disaster for the MCX and its member organizations.
Edited by Maurice Nagle
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