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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