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CVS Pulls Apple Pay, And Many See A Fight Over Mobile Wallets

A customer makes a purchase using Apple Pay on her iPhone 6 at a Walgreens store in Times Square last Monday. The mobile payment service has now been blocked by CVS and Rite Aid. John Minchillo/AP Images for MasterCard hide caption

toggle caption John Minchillo/AP Images for MasterCard

A customer makes a purchase using Apple Pay on her iPhone 6 at a Walgreens store in Times Square last Monday. The mobile payment service has now been blocked by CVS and Rite Aid.

John Minchillo/AP Images for MasterCard

One week after Apple's new mobile payment system, Apple Pay, debuted in CVS stores, CVS has backtracked and barred its use. Rite Aid took the same step, leading many observers to note that the two companies are part of a group of retailers that's developing its own payment system, called CurrentC. Partners include Wal-Mart, Best Buy and 7-Eleven.

The two pharmacy chains stopped using Apple Pay and other "swipeless" payment systems, including Google Wallet. Previously, CVS and Rite Aid had joined other large retailers to create their own mobile wallet, with two key goals: cutting major credit card companies out of their transactions and building more consumer loyalty (and data tracking) through points programs and store credit cards.

Another test of the new system could present itself in the case of Target. Apple mentioned the retail giant at its event announcing Apple Pay, but Target is also a member of the Merchant Customer Exchange, the group that's working on CurrentC.

Further illustrating how delicate and complicated the mobile payment issue promises to be, the MCX website's photo of the CurrentC app shows it running on an Apple iPhone.

Here's a rundown of angles on the story:

"Apple is partnering with Visa, MasterCard and American Express as well as the biggest banks, which together cover more than 80 percent of credit card purchases in the U.S. And Apple is opening up a new revenue stream because it'll get a small cut from the transactions." — NPR's Aarti Shahani.

"Some merchants are finding themselves tied to the Merchant Customer Exchange, known as MCX, while Apple Pay is being rolled out. 'Merchants are contractually obligated to MCX, so they really don't have a choice,' Nathalie Reinelt, an analyst with Aite Group, said in an e-mail." — Bloomberg News

"Please note that we do not accept Apple Pay at this time," says a Rite Aid memo quoted by NFC World. "However we are currently working with a group of large retailers to develop a mobile wallet that allows for mobile payments attached to credit cards and bank accounts directly from a smart phone. We expect to have this feature available in the first half of 2015."

"The only thing that's clear is that sooner or later, consumers are bound to become confused. Which phone can I use (Apple does not support Google Wallet)? Which payment type do you accept? And who the heck can I trust with my data? There goes the convenience factor." — Forbes

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