Mobile payment competition heats up at retail

The announcement earlier this week that Rite Aid, a member of the Merchant Customer Exchange (MCX), would begin accepting Apple Pay, Google Wallet and Google Pay was the latest twist in the competitive battle for mobile payments at retail. Further clouding the picture was yesterday’s announcement that Samsung Pay will launch on Sept. 28 in the U.S.

"By accepting mobile payments, we’re able to offer Rite Aid customers an easy and convenient checkout process, which we know is important to them," said Ken Martindale, CEO of Rite Aid stores and president of Rite Aid Corporation, in a statement. "Investing in mobile technologies is just one piece of Rite Aid’s evolving digital strategy and we will continue to explore, test and implement innovative technologies that will help us to better serve our valued customers."

Rite Aid is not the first MCX member to announce plans to accept other forms of mobile payments. Back in April, Best Buy said the company would begin accepting Apple Pay in its U.S. stores later in 2015. The day after Best Buy’s announcement, former MCX CEO Dekkers Davidson resigned from the retailer consortium and was replaced by Brian Mooney, who previously served as CEO of Bank of America Merchant Services.

A full-scale launch of the MCX’s CurrentC system, which was expected in the second half of 2015, may not happen until next year.

Samsung pay

Photo: Samsung

"This is a long game, Mr. Mooney told Re/code. "Certainly going faster is always better — that’s not necessarily a debatable point. But we’re going to do it right."

Samsung is the latest to think it has the right stuff in mobile payments. The consumer electronics giant has timed the launch of its mobile payment system with the debut of its new Galaxy S6 edge+ and Galaxy Note5 devices. Samsung Pay will be preloaded on select S6 and Note5 devices and a free software upgrade will be released in the coming weeks for the company’s Galaxy S6 and S6 edge devices.

"The future of mobile payments has arrived," said InJong Rhee, EVP of Samsung Electronics, Global Head of Samsung Pay, in a statement. "We are partnering with card networks, issuers and acquirers, and Samsung Pay will also be the first to support contactless payment for store-branded credit cards. The list of partners will only grow."

BrainTrust

""Heat up" is a relative term. On the one hand, I find Apple Pay entertaining. On the other hand, I forget to use it a lot of the time. I’m not alone — I think something like 34 percent of users report the same."

Paula Rosenblum

Co-founder, RSR Research


"I read this article somewhere where it said two guys got their gas at the gas station and paid by Apple Pay. Sounds normal but just that the country wasn’t the U.S., this was in a village in Africa."

Shilpa Rao

Practice Head, Merchandising, Tata Consultancy Services


Discussion Questions

Do you see the competition for mobile payments heating up at retail over the couple of years? Do you see complications arising at store level? Which companies do you see emerging as winners in the battle to become the preferred payment option among consumers?

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Max Goldberg
Max Goldberg
8 years ago

Mobile payment will become viable when it’s safe and secure. As advances are made in this area adoption will grow and competition will heat up. Apple and Google will be winners. MCX will not.

Paula Rosenblum
Paula Rosenblum
8 years ago

“Heat up” is a relative term.

On the one hand, I find Apple Pay entertaining. On the other hand, I forget to use it a lot of the time. I’m not alone — I think something like 34 percent of users report the same.

Also, it turns out the three-year MCX exclusivity deals were signed in 2012, so they’re expiring and almost no one is re-upping. So it’s not exactly big news. It’s just the end of a cycle. In any case, CurrentC was DOA the day MCX got hacked, and the day we found out it was an app using QR codes and not using NFC at all. And there is absolutely no reason for any retailer to make it their exclusive form of mobile payment. It saves a few basis points, sure, but the consumer REALLY gets nothing out of CurrentC. So why bother?

In general, there’s still not a lot of evidence that mobile payments are a solution to a problem — they’re more like a solution looking for a problem. That’s why it’s easy to forget to use them. And it doesn’t help that you still have to stop and squiggle your signature across the PIN pad anyway, even though you’ve already validated your fingerprint. This apparently has to do with retailer/payment processor contracts. Silly!

In addition, a surprising number of retailers (at least to me) have done their EMV conversions without adding in NFC capabilities. The two big ones I’ve seen that come to mind are Target and Publix. I was really quite surprised.

I suppose it’s likely that over the long, long haul, mobile payments may take off. When that happens it will be a two-horse race between Samsung and Apple Pay, with something agnostic for all the other phone manufacturers and Windows phones coming in third.

Ralph Jacobson
Ralph Jacobson
8 years ago

I look forward to the day when we have one simple, default payment provider. I believe it will happen soon.

Shilpa Rao
Shilpa Rao
8 years ago

I read this article somewhere where it said two guys got their gas at the gas station and paid by Apple Pay. Sounds normal but just that the country wasn’t the U.S., this was in a village in Africa. Countries that have completely skipped the computer and plastic card era and fast forwarded to the mobile era are seeing much faster adoption of mobile payments.

In the U.S. where almost 90 percent of the transactions are plastic, it’s not so easy to remember and switch to phone payment. Also security is still being figured out.