On Monday, Best Buy announced that it would start accepting Apple Pay methods for on-line purchases and work towards bringing the innovative technology into its brick-and-mortar stores later this year.
Tim Cook, Apple’s chief executive, was the first to break the news on Monday morning during a conference call. He disclosed that Best Buy wouldl be using Apple Pay as a payment method through its application.
The move is huge both for Best Buy and Apple. Best Buy will be able to better compete with Walmart, which already uses Apple Pay, while Apple was able to lure a member of the MCX group into using its payment method. The MCX is a consortium of retailers that is already working on its own pay-by-phone app called CurrentC. Although CurrentC was built to compete with Apple Pay, Best Buy announced that it won’t use CurrentC when it rolls out. Nevertheless, the retailer also said that it “remained invested in MCX.”
But in a previous statement, a MCX spokesperson described Best Buy as a “strong partner” that supported the CurrentC project. MCX also argued that for CurrentC’s success there needed to be at least two to three major partners to support and promote it. The group seems committed to CurrentC as one of the best mobile payment solutions for their clients and consumers.
However, we don’t know yet whether other members of the group would follow Best Buy’s example and close a deal with Apple.
We do know that Best Buy won’t be able to accept Apple Pay in its stores until this summer because that is the time when its exclusivity deal with MCX expires. Best Buy neither confirmed nor declined the information, but did say that it needed more time to update its infrastructure to make it ready to accept Apple Pay.
MCX declined to provide details on the exclusivity agreement with Best Buy, but admitted that it was set to expire since its provisions were limited in both scope and time.
Two of the merchants in the MCX group, which is led by Walmart, made headlines last fall when they declined to further support Apple Pay after they agreed to accept it in their stores.
CurrentC was designed by MCX as a mobile wallet that would bring significant savings in processing costs to big retailers. Merchants usually pay additional fees when processing credit cards from, let’s say, American Express or MasterCard. CurrentC would doge these fees because customers would fund it via their bank accounts or a credit card issued by the retailer where they shop.
In 2014, Walmart filed a complaint against Visa for allying with banks to impose uncompetitive transaction fess to retail industry players.
On the other hand, Apple Pay is an expensive payment method for merchants also since it does not accept store-issued credit cards or direct connections to customers’ bank accounts. That’s why, many merchants from the MCX group declined to implement Apple Pay in their stores.
Although huge companies such as McDonald’s and Whole Foods use Apple Pay since last fall, Apple finds convincing new customers of its payment system’s advantages rather challenging.
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