Why Did Rite Aid and CVS Dump Apple Pay a Week After Offering It to Customers?

Mobile paymentWithin one week of introducing smartphone payments with Apple Pay at their stores, pharmacy chains Rite Aid and CVS disabled Apple Pay, along with other tap-to-pay mobile payments systems with Google Wallet and Softcard.

The sudden change pushed customers to complain over Twitter, siding with Apple rather than the drugstores.

But so far, no clear-cut answer has come from either chain. CVS has not released a statement, and Rite Aid spokesperson Ashley Flower wrote an email to Bloomberg Businessweek, saying, “We are continually evaluating various forms of mobile payment technologies, and are committed to offering convenient, reliable, and secure payment methods that meet the needs of our customers.”

However, analysts for the publication expect that convenience, reliability and security have nothing to do with the situation.

Walmart, Best Buy, and about 50 other retailers, including Rite Aid and CVS, are working on their own mobile payments system, known as CurrentC. Where Apple Pay and others work with Visa, MasterCard, and American Express, CurrentC would cut out credit card networks altogether, saving merchants the average 2% transaction fees they now pay to credit card companies.

Stores using CurrentC can also gather data about transactions to offer their customers discounts and loyalty programs. Meanwhile, Apple Pay has drawn criticism because its platform is almost too anonymous for some merchants. CurrentC is expected to be ready sometime in 2015, meaning that, at least for now, Apple Pay users don’t have another mobile option when they visit their favorite stores.

“I don’t believe the removal of Apple Pay has anything to do with it’s functionality or security. As the average shopper continues to want more effective, secure and efficient ways to shop – this is where we seem to be moving towards. Proprietary mobile solutions that are looking to cut out Visa and MasterCard and other major credit card companies. Most of the larger chains that are discussed, Best Buy, Walmart, CVS etc all do such high transaction volumes that being able to reduce that 2% would be extremely beneficial to their bottom line,” said Jordan Rinaldo, Marketing for BNA Smart Payments.

Tim Cook, Apple’s Chief Executive, said that earlier mobile payments systems have failed because they were made to support businesses rather than be useful for customers. The push for Apple Pay, however, meets Apple’s own primary goal: sell more phones, tablets and computers.

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