Yesterday (Nov. 4), Walt Mossberg published an interesting article about Apple Pay on Recode.net.
Basically, the article spoke to CVS sacrificing an available convenience (Apple Pay/NFC) in favor of a mobile payment business relationship (CurrentC/MCX) it previously forged. The end result is a diminished customer experience for now.
I wonder if CVS tested the payment flows first-hand for Apple Pay versus CurrentC versus Google Wallet.
If I were to speculate, I can imagine the boardroom table at which a CVS team sat down to make this decision. They might have debated the tradeoff between continuing to allow Apple Pay (and other NFC services) alongside CurrentC. Perhaps someone said, “To give CurrentC the best chance at success, we should give them exclusive access and turn off other options.”
I can understand how that might be a compelling argument from a business point of view; however, I feel that it ignores the experience of the end consumer. Did those same decision makers test the payment flows first-hand for Apple Pay versus CurrentC versus Google Wallet? Did they weigh the customer’s experience in their decision to turn off other mobile payment options? That’s all speculation, but it’s what goes through my mind if I try to reverse engineer CVS' business decision.
Why can't CurrentC's partner merchants offer both Apple Pay and CurrentC?
Mossberg asks a valid question in the headline, “What are the anti-Apple Pay merchants afraid of?” Why can’t these merchants offer both Apple Pay and CurrentC? Does the POS need to be exclusive? The merchants could save money on CurrentC transactions and still offer Apple Pay to people that want it.
From a consumer’s point of view, it would be much better to have flexibility and choice. I equate the CurrentC exclusivity with retailers who choose to honor only one credit card (yes to Visa but no Mastercard for example). It seems a strange and arbitrary decision that isolates and aggravates customers who carry only one of those payment methods. The Visa/MasterCard situation is different because they are the largest players in the credit card space, and we are not talking about the same industry maturity or brand awareness or technological stability when we talk about ApplePay/CurrentC.
The temptation to gain exclusive rights to an industry (in general economics terms) is so tempting for businesses because of the massive advantage that would afford. So I can understand where the impulse comes from. But I think that as the industry matures, the consumer demand for flexibility and choice will ultimately prevail as it has in the credit card space.
The payment space is the Wild West of retail. It'll be 2-3 years before it stabilizes.
Even beyond Apple Pay and CurrentC, the mobile wallet/mobile payment space remains a battleground.
- Mashable reported today that 48% of consumers have never made a purchase with their phone. (To be fair, not many phones in the field support NFC tap-to-pay yet either.)
- IT World reported Monday (Nov. 3) that Amex is coming up with its own Apple Pay competitor.
- PC World reported (Oct. 30) that major U.S. and international banks are planning their own apps as well.
The payment space is the Wild West of retail. How long it takes to stabilize the situation is anybody’s guess. My own guess: It’ll be 2-3 years before we see enough major players appear and consumer expectations of how to pay with mobile devices become more widespread. That’s completely a gut feeling though. Another as-yet-unknown startup could introduce something that turns this space on its head again. The only thing we can be certain of is that major changes will be afoot for a while.