So Rite Aid and CVS have decided to block Apple Pay in their stores. I’d characterize this as short-sighted and a likely damaging mistake. It’s one thing to not rush to adopt the new platform, but to deliberately get in consumers’ way is pretty much never the right option. Once a certain technology is in enough peoples’ hands and is convenient to use and the blockade is transparent enough to regular people, they will deliberately seek out alternate solutions.
As more and more people buy NFC-enabled phones (the technology that powers Apple Pay, as well as numerous Android options as well), they’ll expect/demand the convenience. Further, considering the motives of these retailers is suspect (they have a competing solution to avoid paying as much credit card fees), these are the combinations that create long-term resentment.
The better solution for these retailers is to re-enable Apple Pay, and then present a better, viable alternative. For example through loyalty programs, or discounts, or freebies, or any other positive incentive they can offer.
Considering the relative easy with which a consumer can choose a nationwide pharmacy chain, I’m curious to see how long this blockade holds.
I vote to choke the payment card brands such as Visa, MasterCard, American Express, Discover, etc. They are a major source of headwind on the economy. We will soon enough see if Apple will return the favor and block iPhone users from taking advantage of the system the drug chains plus other retail merchants including Wal-Mart and Best Buy are ginning up to deliver goods at lower cost by subtracting the fees transaction processing giants now require.
According to an NPR story today, Apple Pay “works on top of Visa and MasterCard.” Instead of competing with credit card companies, “Apple built its system on top of credit card companies.” And presumably Apple adds a fee on top of the one already charged by and paid to the credit card companies.
Rite Aid and CVS won’t be “blocking” Apple Pay any more than my local restaurant blocks American Express by accepting only cash, Visa or MasterCard or Costco blocks Visa and MasterCard by accepting only cash and American Express. Rite Aid and CVS just won’t accept Apple Pay.
Using a phone as a proxy for a credit card or cash has been a long time coming and I suspect it is a combination of banks and regulators that make a rational and price/cost effective system difficult to implement. Apple may be a lot of things but it is not, nor does it want to be, a financial institution. Just let them handle the bits and take a cut of each transaction.
The banks want the cut to come from the merchant (and therefore the customer), not from them.