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CVS Blocks Apple Pay To Make Room For Competitor

CVS blocked Apple Pay in its stores this week in a move to make room for a competitor being developed by some of the nation's biggest retailers.
Posted at 8:39 PM, Oct 25, 2014

Apple Pay, the tech company's effort to turn its latest model of iPhone into a de facto credit card, has had some struggles in its first week since launch.

A glitch resulted in about 1,000 Bank of America customers being charged twice for some purchases made using the system. But that kind of error isn't totally surprising for any new product, and Apple immediately stepped up and resolved the issue. 

Its other problems are a bit less predictable — and much tougher for Apple to resolve on its own.

CVS just became the latest retailer to shut off NFC-based payment options in stores, which essentially means Apple Pay can't be used in its locations. Another pharmacy chain, Rite Aid, made a similar move this week. 

The move will also block the similar payment system Google Wallet at those locations.

SlashGear obtained an internal company memo that revealed the motivation behind the decision: Rite Aid, along with CVS and dozens of other retailers, are developing a mobile wallet system that would be a direct competitor with Apple Pay. 

The competing payment feature is called CurrentC. Users pay by showing a QR code on their mobile device at checkout, and funds would then be pulled directly from a linked bank account.

And a host of big-name companies banded together to develop it, including Walmart, Best Buy, Southwest Airlines, Target and many, many more. 

Which is likely why it is designed to give a clear benefit to retailers. VentureBeat writes, unlike Apple Pay, CurrentC cuts out credit cards altogether and explains, "Retailers like this because it rids them of having to pay credit card fees on all transactions."

CurrentC, which hopes to launch sometimes next year, might have retailers behind it but banks and credit card companies are siding with Apple Pay.

The Verge writes, "Banks and credit card companies have enthusiastically supported Apple Pay, seeing it as a way to increase the number of purchases people make with their credit cards."

In addition to banks and credit card companies as allies, Apple has another advantage: its millions and millions of users. After all, the tech giant has been setting the standard for how people use mobile devices for years. 

But all Apple's clout won't mean a thing if it can't convince some of the world's biggest retailers to allow shoppers to use its devices. So the fight for a dominant mobile payment system boils down to two sides: people's favorite places to spend money and the places that store that money. 

This video includes images from Getty Images.