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Apple Pay has rivals in mobile payment

Associated Press

NEW YORK – Plan on paying in stores with your shiny new iPhone 6? Not so fast.

Retailer resistance to Apple Pay had been expected because Apple hasn’t offered incentives to install pricey point-of-sale terminals and train staff on its new mobile payment system. But the decision to not accept Apple Pay by retailers that already have contactless terminals in the checkout line is a “skirmish” rooted in competition.

Big merchants like McDonald’s, Macy’s and Foot Locker are all accepting Apple Pay. But a consortium of retailers called Merchant Customer Exchange plans to offer a rival mobile payment system next year that could direct payment to debit customers’ checking accounts, instead of using a credit card. It also will be designed to track customer buying patterns to be able to offer targeted promotions. In the meantime, some of the group’s biggest members, like CVS, 7-Eleven, Best Buy and Wal-Mart, are nixing so-called near-field communication payments even though they already have the point-of-sale technology in stores. Other retailers that aren’t part of Merchant Customer Exchange, like Starbucks and Taco Bell, are opting to develop their own mobile payment services and aren’t taking Apple Pay either.

“Retailers (that are part of Merchant Customer Exchange) are certainly going to give it a go on their own; they spent the last few years and money developing this,” eMarketer analyst Bryan Yeager said. “Ultimately, if there’s enough consumer demand for it in the long run, maybe they will accept Apple Pay, but they’re very much intent on trying to make a go at their own mobile wallet.”

Although nascent, the appetite for mobile payment is growing. Mobile commerce is expected to total $305.7 billion in 2014, up 15.7 percent from 2013, according to eMarketer.

Apple Pay launched Oct. 20. On Monday, Apple CEO Tim Cook called the dispute with retailers a “skirmish.”

“We’ve got a lot of merchants to sign up, a lot more banks to sign up and we have the whole rest of the world,” he said at the WSJD Live Conference in Laguna Beach, California. “So we’re just getting started.”

By next October, retailers will be required to have point-of-sale terminals that work with the new EMV chip-and-pin security standard for credit cards. Those terminals usually also have the near-field communication capability to work with Apple Pay, Google Wallet and Softcard systems, but they aren’t automatically enabled to work with near-field communication.

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