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CVS, Rite Aid Shut Down Support for Apple Pay

Two of the nation's biggest drugstore chains pull the plug on their informal support of Apple Pay as they work with a consortium of retailers to create a competing mobile wallet.

Vjeran Pavic for Re/code

Two of the nation’s largest drug store chains have shut down support for Apple Pay — less than a week after the debut of the mobile payment service.

CVS’s retail terminals, which in tests earlier this week accepted payments via Apple’s iPhone 6, suddenly began rejecting these transactions this weekend. The same is true of Rite Aid, according to one person with direct knowledge of the situation.

Neither CVS nor Rite Aid responded to requests seeking comment on the development, which was first reported by MacRumors and independently confirmed.

The move appears to be motivated by business considerations, based on an internal document obtained by SlashGear, which noted that Rite Aid is working with a consortium of retailers to develop a rival mobile wallet.

Both retail pharmacy chains are members of the Merchant Customer Exchange, a company created by retail heavyweights including Walmart, Best Buy and Target.

The joint venture, formed in 2012, plans to launch its own mobile payment app, CurrentC, next year. Once launched, it will be accepted at 110,000 merchant locations around the country — competing directly with Apple Pay and Google Wallet. CurrentC users will have to either connect their bank account to the app or a retailer’s branded debit or credit card. Traditional credit card accounts can’t be used with CurrentC like they can with Apple Pay, because Merchant Customer Exchange retailers are trying to avoid the transaction fees associated with them.

“Apple Pay, I believe, was viewed as a threat and therefore — even though they supported Google Wallet — they seemed to back away from it and not support it, and cut off consumers from their ability to transact,” said Patrick Moorhead of Moor Insights & Strategy.

However, one well-placed source said the drug stores were worried about the consumer experience — because not all bank-issued credit cards can be used.

Customers received no warning of the change in policy.

Apple Pay seemed to work perfectly at a CVS drug store in the Washington, D.C., area on Saturday afternoon, then the terminal rejected the transaction, notifying the customer “another form of payment is required.”

Neither the manager, the pharmacist nor the cashiers could explain what had happened.

Rite Aid terminals displayed a notice that the drugstore chain does not accept Apple Pay.

Customers turned to Twitter to express their displeasure at the decision, with some criticizing the retailers for depriving consumers of choice when it comes to payment options.

https://twitter.com/chrismarquardt/status/526111846013865984

https://twitter.com/jimprosser/status/526053957743812609

This article originally appeared on Recode.net.

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