Reports: CVS, Rite Aid drop support for Apple Pay, other NFC-based mobile payments

Drug store chains CVS and Rite Aid appear to have decided to stop supporting Apple (NASDAQ: AAPL) Pay, the company's new mobile payments platform, as well as other payment methods that use Near Field Communications technology, according to multiple reports.

According to Bloomberg Businessweek, the companies also dropped support over the weekend for Google (NASDAQ: GOOG) Wallet and Softcard, the NFC-based mobile payments platform supported by Verizon Wireless (NYSE: VZ), AT&T Mobility (NYSE:T) and T-Mobile US (NYSE:TMUS). The news was first reported by MacRumors.

CVS hasn't publicly explained its decision or responded to requests for comment, according to multiple reports. Rite Aid spokeswoman Ashley Flower defended the company in a statement to Bloomberg Businessweek. "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," she said.

CVS and Rite Aid were among 220,000 U.S. merchants that support NFC payments, but were not among those specifically named as accepting Apple Pay, Bloomberg noted. CVS's retail terminals had been accepting Apple Pay payments, but suddenly began rejecting such transactions this weekend, according to Re/code. The same thing happened at Rite Aid stores, the report said, citing an unnamed source familiar with the matter.

Industry analysts have said that the decision by the drug store chains may be an indication that they want to support another mobile payments system called the Merchant Customer Exchange (MCX). Shortly before Apple unveiled Apple Pay in September, MCX unveiled the brand name CurrentC for its mobile wallet, loyalty and offers platform, which it will launch in 2015 at around 110,000 retail locations, including at Walmart, Best Buy and Target.

"This act by CVS and Rite Aid heralds the advent of the imminent battle in the mobile pay system," Anindya Ghose, a marketing and information-technology professor at New York University, told Bloomberg.

"Clearly Rite Aid and CVS are making a business decision over a customer satisfaction decision," Patrick Moorhead, president of Moor Insights & Strategy, told the New York Times.

CurrentC does not use NFC and instead will use digital QR codes generated by the app to process payments Apple's App Store and Google Play for Android devices.. According to MCX, the app will make purchasing more seamless by applying qualifying offers and coupons, participating merchant rewards, loyalty programs and membership accounts, and then offering payment options through the consumer's selected financial account, all with a single scan. Further, users' payment information will be secured in the cloud rather than on the device, and the app will use a token placeholder to make transactions instead of constantly passing the data between the user, merchant and financial institution.

For more:
- see this MacRumors article
- see this Re/code article
- see this NYT article
- see this Bloomberg article
- see this Bloomberg Businessweek article

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