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Why You Can't Use Apple Pay at CVS, Walmart and Other Retail Stores

Hint: It's not all about Apple.

Marshall J. Betterton

CVS and Rite Aid infuriated a vocal group of iPhone owners when their stores recently cut off support for Apple Pay, the new payment system built into the new iPhones.

But the decision to block Apple Pay had little to do with Apple and much more to do with credit cards. Let me explain.

A few years back, Walmart spearheaded the creation of a consortium of retailers known as MCX, which stands for Merchant Customer Exchange. The group — which includes dozens of retailers like Target, Kohl’s, Best Buy and, yes, CVS and Rite Aid — got together with the goal of creating a way for their customers to pay using their phones.

The new payment method would help them accomplish a number of things, as we previously reported, such as keeping tech companies like Google away from the retailers’ customer data as well as letting them automatically send coupons to their shoppers onto their phones. But the main reason was the mobile payment method they’d create would cost them less.

Retailers believe the transaction fees they pay banks on credit card and debit card purchases are arbitrary and too high. There have been lawsuits and settlements, but retailers are still unsatisfied. So they’ve looked for ways to entice their shoppers to use payment methods other than traditional credit and debit cards. Enter MCX and its first product, a mobile app called CurrentC.

MCX will allow users to attach a number of different funding sources to the CurrentC app: Checking accounts, store gift cards and select merchant-branded plastic. Clearly absent from that list are the mainstream debit and credit cards that are issued by banks, as well as American Express.

If mobile payments take off, MCX wants to get its customers onto their CurrenC app as that won’t incur those credit card fees. That helps to explain why MCX retailers may have barred Apple Pay in their stores; at the most basic level, Apple Pay is like having those traditional credit and debit cards (which MCX retailers despise) right on your phone.

Unlike with Apple Pay, CurrentC users will have to unlock their phone and open up the app to pay for something. Then a cashier will have to scan a QR code that appears on the customer’s phone or the customer will have to scan a code with their phone. If this sounds less smooth than Apple Pay, it’s because it likely will be. (That said, Starbucks has had remarkable success with its payment app which works in a similar way.)

The reliance on scanning instead of NFC (the system Apple Pay uses) means MCX retailers can turn off the NFC functionality on their checkout machines permanently since CurrentC doesn’t use it. Or, they can just make the change temporarily to ensure Apple Pay doesn’t build adoption in their stores before their own app even launches.

Oh, that’s right. CurrentC isn’t available to the general public and won’t be until sometime in 2015, MCX has said. That could be a few months from now, or more than a year from now. They aren’t saying.

In the meantime, customers shopping at the stores of MCX retailers won’t be able to use Apple Pay or Google Wallet, which also uses NFC technology, to pay for their goods. It’ll be that old plastic stuff or cash until CurrentC eventually launches.

This article originally appeared on Recode.net.