[NewsPoster]

Following reader complaints of Rite-Aid stores no longer accepting Apple Pay or Google Wallet payments (following a brief period where both worked properly) and a "cone of silence" from PR representatives, leaked documents have revealed that the reversal by Rite-Aid on accepting NFC-based payments was deliberate, and that it may never accept Apple Pay, since it is planning to go with a rival mobile payments platform -- sometime next year.

The internal document, obtained by SlashGear, orders employees to apologize for the lack of Apple Pay or other NFC-based mobile payment support and require some other form of payment. "Please instruct cashiers to apologize to the customer and explain that we do not currently accept Apple Pay, but will have our own mobile wallet next year," the memo says. "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."

This is almost certainly a reference to Merchant Customer Exchange (MCX) also known as "CurrentC" -- an alternative payment system backed by Walmart and Best Buy which will not support Apple Pay. The MCX system, which aims to cut out the small percentage collected by banks and card issuers (usually around two-to-three percent of a sale), is said to use only a platform-agnostic app for its payment technology, which means that older iPhones, Android devices and other platforms could conceivably use it -- however, MCX is deliberately designed to gather customer data, unlike Apple Pay, and stores customer data in a cloud setup, among other security challenges. Thus far, it's intention and stated security scheme compare poorly to even the Google Wallet standard -- which itself is also aimed at gathering customer data, and is less secure than Apple Pay.

Apple Pay, while more secure than even the forthcoming (and essentially mandatory) EMV (chip-and-PIN) credit and debit cards, is restricted to working with the iPhone 6 and iPhone 6 Plus at retail due to the requirement for an NFC radio in the devices, alongside Touch ID. The iPhone 5s should also be compatible, when used in conjunction with the NFC-sporting Apple Watch which is due out early next year. The latest iPad models, also now featuring Touch ID, are said by Apple to be compatible with Apple Pay for online transactions only.

Rite-Aid has already gotten an earful from customers that previously used the Apple Pay system at their stores during the brief window when it was available, with most saying they will simply take their drugstore business to rivals such as Walgreen's and CVS, both of whom support Apple Pay. . A Forbes story that tested Apple Pay with various merchants initially had smooth success with Apple Pay.

When the author later could no longer use the service, he noted that "in order to do [the reversal on support for Google Wallet and Apple Pay], you have to specifically design your back end to look for transactions using those IDs and then halt them, while still allowing ordinary NFC-equipped cards to pass through. In other words, you have to spend effort to inconvenience your customers." The writer said he, too, would be thus informing Rite-Aid management of his decision to shop elsewhere, calling the move "a weird decision."

The public anger at the Rite-Aid reversal goes well beyond the usual enthusiasm hard-core Apple fans have for the company's products, and suggests that Apple Pay has already found a loyal audience among the millions of early iPhone 6 adopters, who find the system works well and enjoy the convenience. Other merchants not supporting Apple Pay are hearing similar feedback from former customers. Visa and Mastercard have reported "unexpected demand" from users which has in turn resulted in some minor snafus in the early rollout.

Previous attempts at a mainstream mobile wallet system -- including Google's version and third-party options like Softcard -- have thus far failed to catch on with the public in the way that Apple Pay has seemingly already done. In large part, its believed that the added security of no visible card numbers, no payment information given to or stored by the merchant, and the authentication process of using Touch ID -- all features of Apple Pay not present in other systems -- have given at least the bleeding-edge portion of the general public the confidence to use the system on a wider scale that "contactless" NFC-based payment options have seen thus far.

[Makosuke]

If, as stated, the MCX/CurrentC system has significantly lower processing fees, then it's understandable why a retailer--particularly a big one that runs what I assume is tight margins like WalMart--would want it. And, honestly, if the competition forces the existing credit card networks to lower their fees, then theoretically everybody should benefit a bit since retailers should (in theory) be able to lower prices a bit in response (though in reality something tells me they'd just take the increase in margin most of the time).

However... if you give me an active choice between a more secure system that does not give the retailer the ability to profile and track me, and one that is less secure (fully cloud-based? really?) and is designed from the ground up to assist them in tracking me (and presumably also sharing that information across retailers), then I'm very actively going to want to chose the better system, store's 1-2% margin gain be damned.

With credit vs. cash I was generally willing to sacrifice privacy and anonymity in exchange for convenience, but if you're going to start an "e-payment processor war" between a better and worse transaction-processing system, I'm sure as heck going to back the one that puts my own security and privacy above the benefit of the retailer.

In short, guess I'm not going to be shopping at Rite-Aid anymore.

[designr]

From my reading of the article it appears that Walmart, et al., want a cut of the credit card fee themselves. In other words, unlike gas stations which often give consumers a discount for cash, MCX gives the stores a "five-finger discount" in the form of lower transaction fees and a bonus in the form of lost consumer privacy.

[TomMcIn]

I would just leave the items I picked up on the counter and walk away. Not only will they lose the sales, but will have to restock. If I was in a rotten mood, I would fill the cart up with trivia before going to the check out.

[DiabloConQueso]

That's the exact idea I had. Rite-Aid reversing their decision to accept Apple Pay is akin to me, as a customer, holding out my hands -- in one hand is a bunch of money, and in the other hand is nothing -- and asking Rite-Aid to pick a hand and having them pick the empty hand.

[Charles Martin]

The article actually makes no mention of MCX offering lower fees, but obviously if the banks get cut out then there is room for a (slightly) lower fee (there's still overhead and the expense of running the system, and that's coming out of somebody's pocket). However, I don't see such a system becoming successful, since it is designed from the ground up to be the evil alternative to Apple Pay -- it exists primarily to collect, share and sell customer data. With all the merchant data breaches we've seen lately, a consumer would have be out of his/her mind if given a choice between these two systems to pick MCX over Apple Pay.

That's why I think we're seeing such a strong backlash to not accepting Apple Pay, not just because iPhone 6 owners want to show off.

[pairof9s]

The limitation of iPhone 6 or above is Apple Pay's biggest obstacle. Their advantage is that MCX is still being developed, but just like Android, MCX's ability to work on so many more models, current and future, makes it open to public popularity.

The question is are you willing to buy an iPhone 6 to get Apple Pay or give up your personal data to use MCX on your current smartphone? It is a legitimate dilemma (although I've made my decision by getting an iPhone 6).

Or maybe you just keep using your credit card like always!

[gprovida]

Well here we go again. Does ultraviolet DVD backed by content providers, magazine publishers wanted my data with Newstand, the withering of Music DRM, etc., suggests that these games to suck data from you and/or inconvenience you, and/or put your data at risk should ultimately fail.

I can't wait until first nightmare on this "me too" system trying to cut the banks out of the value chain goes kaput.

I will be getting my iPhone in Nov and I am pretty sure no shopping at Walmart, Riteaide, or Best Buy this Christmas or in general, even Amazon supports Apple Pay online.