Partners Say CVS, Rite Aid Dump Of Apple Pay Could Pose Security Risk

A week after Apple launched its new mobile payment platform, Apple Pay, CVS and Rite Aid are no longer accepting the payment option.

Both companies have opted to discontinue the support of NFC payment options, including Apple Pay and Google Wallet, in favor of a platform called CurrentC, which they and 56 other major retailers are working on, according to a report by Bloomberg.

The network of retailers building the platform is called Merchant Customer Exchange (MCX). The benefit these companies would receive from dumping NFC payment options for the yet-to-be released CurrentC platform is eliminating the 2 percent swipe fees paid to credit card companies by retailers supporting mobile payment platforms such as Apple Pay.

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Apple did not respond to a request for comment. Some Apple partners and tech analysts said moving away from Apple Pay places the security of customer's financial information at risk for financial benefit.

"I think it's greedy and a short-sighted move," said Raul De Arriz, national government sales manager for Waitsfield, Vt.-based Small Dog Electronics, one of one of the top Apple specialists in the country. "They decided they didn't want to allow Apple Pay because the system they have in mind will give them backend money. Their hope is that people will download their application. But in reality, it circumvents the whole security process of Apple Pay. Apple Pay gave these vendors the ability to have more security for their customers. Some of these companies are the same people who have lost data before. They are giving up security because it would be better for their bottom line."

Some of the companies backing the CurrentC platform include Walmart, Target, Best Buy and Gap.

Target, which is still accepting Apple Pay, was hit with a major data breach during the holidays last year. Personal information of up to 70 million people were compromised, in addition to up to 40 million credit and debit card accounts. Target did not respond to a request for comment.

CurrentC uses a QR code for customers to complete a payment, and unlike Apple Pay, allows merchants to gather data on transactions in order to offer discounts and loyalty programs to customers.

"At this time, CVS/pharmacy cannot accept Apple Pay or other mobile payments that use NFC technology," a CVS spokesperson said. "We are in the process of evaluating mobile payment options for our customers."

Next: More Partner Thoughts On CVS, Rite Aid Decision

Apple partners question why CVS and Rite Aid accepted Apple Pay to begin with before pulling the plug, wondering whether the move was a way to draw attention to their platform.

"It's weird that they would enable themselves to do Apple Pay and then pull out of it," said Michael Oh, CEO of Boston-based Apple partner Tech Superpowers. "As far as I can tell, if you work for CVS or Rite Aid, you are in a decision making position on which platform to use. You wouldn't use it for a little while then pull out. People who are partnering with Apple on Apple Pay knew how it worked beforehand. The only explanation that I have is that maybe they used this to get people to pay attention to their platform."

Oh added it's not unlikely people would make their shopping decisions based on this latest news, as he's heard some say they'll spend their money at Walgreens.

"Given that we are still in the process of evaluating our mobile payment options, Rite Aid does not currently accept ApplePay," a Rite Aid spokesperson said. "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."

Patrick Moorhead, president and principal Analyst of Moor Insights & Strategy, a leading tech analyst firm based in Austin, Texas, said Apple Pay represents the more secure platform and, in addition to giving up ease of use, companies backing the CurrentC platform are passing up customer security.

"It's shortsighted of CVS and Rite Aid," Moorhead said. "They are putting money ahead of user satisfaction. As a whole, the industry needs electronic payments to work better. They are giving up security as we can say Apple Pay is the more secure payment system. They are passing up security and privacy because they want the data, as opposed to Apple who can't see what you are buying. They want the data to do a better job of cross-selling the consumer and offering deals that they are more likely to buy."

MCX did not respond to a request for comment on the matter.

PUBLISHED OCT. 27, 2014