Apple vs Walmart: Mobile Payments Reveal A Clash Of Titans

RETAIL 10/28/2014 @ 3:00PM

Apple vs Walmart: Mobile Payments Reveal A Clash Of Titans

There’s a battle shaping up in the retail world that pits two of the largest and most powerful players — Apple and Walmart — directly against each other, thanks to Apple’s new payment platform. It’s an interesting example of an internal industry struggle spilling out into a public street.

The core of the matter is Apple Pay, Apple’s new mobile payment system that launched Monday. Simple, elegant and safe mobile payment options have long eluded retailers and technology companies, and Apple Pay promises to bring us a lot closer to a solution that both works, and works for consumers.

Apple Pay works with point of sale terminals equipped with Near Field Communication (NFC) technology. It lets users tap to pay, assuming they own an iPhone 6 and have uploaded a credit card to work with the program.

Not all retailers have NFC terminals and even a couple who do — namely CVS and Rite Aid —  have opted to turn off Apple Pay functionality. That’s because a competitive payment platform called CurrentC is forcing retailers to make a choice to accept one or the other.

Essentially, CurrentC is the product of the Walmart-led Merchant Customer Exchange (MCX). A group of big retailers and merchants that spent years trying to develop a system that would ease the burden of paying swipe fees to credit card companies. These businesses got together, built a platform and rolled it out, and then came head to head with Apple’s.

But MCX required participating merchants to pay an upfront fee and commit to three-year exclusivity, with some leeway within the first year of joining the exchange. CVS and Rite Aid are on this list.

So now we have an epic battle, a clash of titans. Apple, often viewed as the “good” guy in white, against big, bad Walmart. There’s even a boycott of MCX-supported retailers being discussed on Reddit.

But consider a few facts:

Retailers have been fighting so-called “swipe-fees” for years. Lobbying government to step in a reduce how much retailers must pay to credit card companies for the convenience of accepting their cards.

For the un-initiated, swipe fees ring up roughly $30 billion annually, according to the National Retail Federation. There have been a series of legal rulings attempting to cap fees, but the dance goes on with retailers actively seeking ways to reduce this burden and Walmart being the most active agitator.

CurrentC is the brain child of Walmart VP and Assistant Treasurer Mike Cook, one participant jokingly said MCX stood for the “Mike Cook Exchange.” CurrentC doesn’t work with credit cards, but rather links to shopper’s bank accounts and deducts funds much like a debit card, allowing retailers to avoid paying swipe fees.

Is Apple Pay a better system than CurrentC? By most early accounts, yes. It’s easy to use, more secure than the old magnetic swipe cards and terminals, and works rather seamlessly at checkout. Since it’s only available for use with the latest model iPhones — the iPhone 6 and 6 Plus — it is being tested by early adopters. This is the ideal group to try  out new technology. They are willing to pay a premium for a new device; are eager to try new technology, often simply for fun; and very forgiving of start-up glitches and hiccups. On this, Apple really knew what it was doing.

It’s pretty premature to think that this is really a battle between Apple and Walmart, Apple Pay and CurrentC. Mobile payments are in their infancy and there will likely be room for several, including Google Wallet available to Android users. The winner will be the one that works best for the consumer, not just the retailer or technology developer.


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