Apple Pay disabled at Rite Aid, CVS. Building their own system?

Apple Pay systems were disabled in Rite Aid and CVS drugstores over the weekend, according to reports. The disabling of Apple Pay may be a way to support a rival electronic payment system being developed by a group of merchants including Rite Aid, CVS, and others. 

Eric Risberg/AP/File
Eddy Cue, Apple Senior Vice President of Internet Software and Services, demonstrates the Apple Pay mobile payment system at a Whole Foods store in Cupertino, Calif earlier this month. CVS and Rite Aid stopped accepting Apple Pay in stores over the weekend, and more retailers could soon follow.

Drug retailers CVS Health Corp and Rite Aid Corp have disabled Apple Inc's new electronic payments service Apple Pay from their stores over the weekend, the New York Times reported.

Apple Pay, which was unveiled in September, is a mobile payment app that allows consumers to buy things by simply holding their iPhone6 and 6 Plus devices up to readers installed by store merchants.

A Rite Aid spokeswoman told the New York Times that the company does not currently accept Apple Pay. The company is "still in the process of evaluating our mobile payment options."

Rite Aid and CVS are not part of the group of retailers that had teamed up with Apple on its payment system. However, Apple Pay technology was working in Rite Aid and CVS stores over the week, the newspaper said.

The reason for the disabling was not immediately clear, the newspaper said. (http://nyti.ms/1rJ2RsA)

According to analysts, disabling the acceptance of Apple Pay is a way to support a rival system that is being developed by Merchants Customer Exchange (MCX), a consortium of merchants that includes Rite Aid and CVS, the NYT reported. Bloomberg Businessweek suggests that the rival system may be meant to bypass credit-card companies altogether and foster more customer loyalty: 

That’s not the whole story. Objections to Apple Pay aren’t actually about convenience, reliability, or security—they are about a burgeoning war between a consortium of merchants, led by Walmart, and the credit card companies. Rite-Aid, CVS, Walmart, Best-Buy and about 50 other retailers have been working on their own mobile payments system, called CurrentC. Unlike Apple Pay, which works in conjunction with Visa, Mastercard, and American Express, CurrentC cuts out the credit card networks altogether. The benefit to the merchants is clear: They would save the swipe fees they pay to the credit card companies now, which average about two percent of the cost of transactions.

CurrentC is also likely to allow merchants to gather data about transactions and offer discounts and loyalty programs. This stands in marked contrast to the anonymity built into Apple Pay, which has drawn concerns even from some merchants who are actively supporting the system.

MCX is developing CurrentC, an app that scans the bar code of the product and initiates the payment transfer by connecting to the customer's debit card, according to MCX's website. CurrentC will not be available until 2015.

Apple, Rite Aid, and CVS could not be immediately reached for comments outside regular US business hours. (Reporting by Rishika Sadam in Bangalore; Editing by Gopakumar Warrier)

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