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Which Mobile Payment To Use – Is it That Big of a Deal?

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The scuffle over mobile payments recently, has opened the door for speculation in the retail industry over which mobile payment will ultimately be used by larger and smaller stores alike.

Initially, this has the appearance of being a big deal because of the cache Apple carries with its very loyal customers. On one side is the publicized consumer favorite Apple Pay. We say “publicized” because there isn’t any real consumer opinion on the challenger, “CurrentC,” since it is in the private testing stage and hasn’t been rolled out on any kind of scale.

The consortium of retailers who developed CurrentC, namely Wal-Mart, Target, and Best Buy, first publicized the system two years ago in an effort to get a lock on mobile payments. Pilots for the program only began in September 2014. The full rollout is slated for 2015. RiteAid and CVS are also part of this consortium called Merchant Customer Exchange (MCX) and they’re hoping to give Apple a run for its money.

The uproar began when consumers who got the Apple Pay app on their iPhone 6’s made purchases at CVS and RiteAid without much trouble. Everything seemed to be fine, until the retailers abruptly pulled the plug and refused to allow Apply Pay transactions to take place. Apple loyalists took to social media to take shots at the offending retailers and vowed to boycott the stores.

Even though CVS and RiteAid have the technology in place to enable Apple Pay, i.e. near-field technology, their link to MCX meant that Apple Pay was not an option and it was initially reported that they were to turn it off, but that is not the case (though, they can’t use both payment options).

Why this matters to retailers is clear: CurrentC will better enable stores to track data on customer purchases, allowing them to send targeted ads or change merchandising strategies based on consumer shopping patterns. CurrentC advocates also hope to lure consumers with rewards, coupons and holiday discounts. Two for one at the grocery store and an extra 10% off post-Christmas shopping, when consumers use CurrentC like store-brand credit cards, might convince consumers to download the app.

Also, the system is more accepting of other mobile devices, like Android, since they use QR technology, so QR codes are the only payment method that will work on Android and iOS that bypass the credit card tax, which makes a more compelling reason for retailers to use CurrentC.

CurrentC draws funds directly from users’ bank accounts, so retailers no longer have to pay swipe fees (costing 2-3% of the transaction amount) to credit card companies. 2013 saw consumers spent more than $2 trillion using credit cards and almost $2 trillion more with debit cards. The savings to retailers are obviously substantial.

Countering that, Apple Pay is more efficient than CurrentC. Apple Pay doesn’t share data with stores as CurrentC does. Apple Pay also works with most credit cards (CurrentC only works with direct debits from a bank account), Apple Pay is more secure and it works even when the phone is asleep and unlocked. Conversely, CurrentC’s QR coding system requires that you unlock your phone and open the app to pay.

MCX’s heavy hitting retail membership is the ace in the hole for CurrentC, since those stores’ combined yearly sales account for more than $1 trillion. The more retailers accept CurrentC, instead of Apple Pay, the more likely the program will succeed.

Another hitch for Wal-Mart, Target and Best Buy, is they call carry Apple products. But, Best Buy could suffer the backlash more than anyone else, as they are the most dependent on Apple. Last year, 45% of its sales came from five suppliers. Apple was their number one. Additionally, Best Buy sells about 10% of all iPhones in the U.S.  

Apple is still a key player in the product mix for the big discounters, because it offers products that many shoppers want. And that can get people in the door and entice them to spend more money on other items. Considering it’s taking a couple of years for CurrentC to even get off the ground and Apple took less than a week to become bigger than all other mobile payment providers combined (as far as usage goes), the clout that MCX has might not matter much, if more and more consumers flock to Apple Pay. 

TAGS: retail, retail trends, retailers,
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