The recent launch of Apple Pay, a mobile wallet system by tech giant Apple, seems to have stirred the hornet’s nest in the mobile payment world as it has opened war against many entities– Apple Vs Wal-Mart or NFC Vs QR codes or Credit Cards Vs Checking Accounts.
Soon after Apple unveiled its ambitious mobile wallet system, two pharmacy chains CVS and Rite Aid barred the access of Apply Pay in their stores. Matching the footsteps, several other retailers ranging from Wal-Mart to Best Buy and Target opted for Apple Pay’s expulsion. This has almost opened a mobile payments war in the coming times.
The retailers are apparently divided into blocks—One supporting the near-field communications (NFC) options such as Google Wallet and Apple Pay and the other consortium of retailers like CVS, Rite Aid and Wal-Mart backing a QR code-based app called CurrentC from Merchant Consumer Exchange (MCX), which is likely to be unveiled by next year.
The MCX group believes CurrentC would be a better replacement for other mobile payment systems including NFC-based Apple Pay as it is linked to a consumer’s debit account directly. As the system doesn’t use credit cards, retailers won’t have to pay for fees per transaction.
On the other hand, the NFC option allows consumers to do painless payments. Besides, it also secures the consumers from any credit card information breach as such confidential details are stored in the user’s phone and not in the cloud.
But what the experts of the mobile payment industry have to say about this war?
According to the experts, who will win or who will lose will be completely decided by a more powerful army and i.e. consumers.
Matt Schulz, industry analyst at Creditcards.com, says, “This skirmish will go on for a while, but ultimately it seems shortsighted to tell customers that you can’t use their competitor’s alternative. The baseline really is the credit card. The process of using one is still very easy, so everything compares to that.”
Another industry analyst Tom McCrohan from Sterne Agee believes even if the retailers go with the upcoming MCX option, they can’t rule out the importance of the NFC option, if they don’t want to take the risk of losing customers.
“If McDonald’s offers Apple Pay, do you think Burger King won’t want to,” McCrohan asks.
Mallory Duncan, senior vice president of the National Retail Federation, says, “Being a retailer, you must consider all– security, costs and flexibility. The best system would be the one that balances all three.”
Zach Goldstein, CEO of a new customer retention app ‘Thanx’, says, “Friction is a challenge with many loyalty programs, and if a customer forgets about you often there’s little you can do to get them back. The math all retailers will be doing is, is it worth saving money on credit card fees at the risk of losing a customer who thinks your mobile payment is too cumbersome.”
For Jason Oxman, CEO of the Electronic Transactions Association, complete decoupling of credit cards from the mobile payment system isn’t realistic.
“Why wouldn’t you as a retailer not allow your customers to choose a system they want to use,” Oxman asks.
The main idea of the mobile payment industry experts is that incorporation of both MCX and NFX options in the payment mode will be profitable for the firms as this would offer the consumers with a painless experience of shopping.