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CVS nixes Apple Pay; competing system being tested in Minnesota

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Only a week after Apple launched its new system allowing shoppers to make a purchase with a wave of their smartphone, some retailers are turning their back on Apple Pay and its Android-based cousin, Google Wallet.

Pioneer Press tech blogger Julio Ojeda-Zapata is among those who tried to use the mobile payment systems at CVS pharmacies Monday, only to be met with a request for another form of payment.

What gives?

A competing mobile payment system called CurrentC is being developed by a consortium of retailers led by the biggest retailer of them all, Walmart.

As 24/7 Wall St. reports, the retailers in the Merchant Customer Exchange (MCX) want to avoid the 2 to 3 percent swipe fees charged by credit card companies on purchases using credit or debit cards. Their system has been in the works for a couple of years and a release in early 2015 is expected.

Apple Pay and Google Wallet use a technology called Near Field Communications that lets users make their transaction by holding a smartphone up to readers installed by stores. CurrentC instead uses QR codes that are scanned by a phone. That saves the retailers from having to purchase the readers or other new equipment, 24/7 Wall St. notes.

CurrentC testing

According to the website MacRumors, Minnesota is the testing ground for CurrentC, with early reviews that are not very favorable. MacRumors calls the system convoluted, noting that using it requires providing a social security number and driver's license number, as well as access to a bank account.

TechCrunch has much more on how CurrentC works and concludes that it was designed more for retailers than for consumers:

"Users have to open their phone, open CurrentC, open the scanner, scan the code from the cashier, and wait for the transaction to be confirmed. That may present more friction than simply paying with a credit card...."

MacRumors says even though its testing is limited, hundreds of negative reviews of CurrentC have already been posted by supporters of Apple Pay and by Android and iOS users, who have taken to reddit to call for a boycott of all MCX partners.

That would cover a lot of retail ground, though, as the roster of MCX member companies shows (click at right to enlarge).

Columnist Paula Rosenblum writing for Forbes wonders if the decisions by CVS and fellow drug store chain Rite-Aid were the result of Walmart pressuring MCX members to keep a united front in their competition with Apple Pay.

On the other hand, Twin Cities-based retailers Target and Best Buy are MCX members that continue to accept Apple Pay and Google Wallet, respectively, Forbes says.

University of Wisconsin law professor Peter Carstensen tells Reuters that while retailers have the right to bypass credit card companies and Apple with their mobile payment systems, they could run into antitrust trouble if they're clearly coordinating an effort to drop Apple Pay.

Forbes' Rosenblum says until there are data to show what percentage of transactions Apple Pay is actually grabbing, it's not clear if the hubbub is over anything substantial, adding:

"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."

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