Today, Best Buy announced they are going rogue and supporting Apple Pay; despite a conflicting affiliation. First, they have enabled the use of Apple Pay through their iOS Best Buy App; available now through an app update. The company will then enable Apple Pay at check out (NFC) in Best Buy stores at a later date this year.
While it may not seem peculiar that a technology retailer wants to embrace the use of new technology to accept payments, the surprising aspect of this announcement is that Best Buy is a member of Mobile Customer Exchange (MCX). This is a consortium of retailers working together on an alternative mobile payment method known as CurrentC. This mobile payment solution will enable customers to pay with their smartphones using QR codes as opposed to NFC technology used by both Apple Pay and Google Wallet.
You may recognize MCX from when we reported late last year on Apple Pay support being pulled from both CVS and Right Aid stores a week after the service was released. Twitter was in uproar over the removed Apple Pay support despite publicly demonstrating that both stores had the technology to support Apple Pay. As a result, it was brought to light that CVS and Right Aid were participating in the MCX which required exclusivity to be a member of their consortium.
It is precisely this exclusivity that makes accepting Apple Pay such an interesting move on Best Buy’s part, as Best Buy is also a member of MCX. Best Buy explains that their goal is to provide customer’s with the right to choose. Below is an excerpt from their announcement:
Today’s consumers have many different ways to spend their money and we want to give our customers as many options as possible in how they pay for goods and services at Best Buy.
What does MCX think of Best Buy’s announcement? USA Today reported of a statement made by the Consortium’s Chief Operating Officer:
We are of the firm belief that there need to be at least 2-3 major players within the mobile payments ecosystem for it to succeed. We remain steadfast and passionate about CurrentC, as well as completely focused on delivering the best mobile commerce solution for our merchant partners and for consumers.
One of the driving forces behind why contributing retailers want to drive adoption of CurrentC is that it removes the middle man so the retailer doesn’t have to pay credit card fees. Credit card merchants charge a percentage of the sale, a processor and acquirer fee, and network fees. These fees add up. Have you ever been to an old gas station that requires a purchase of $5.00 or more to use credit? Now you know why. (I’ve purchased far more beef jerky in life as a result of such demands… Not a bad thing.) Apple Pay and Google Wallet still rely on credit/debit card networks which still require such fees.
Additionally, using QR codes is bound to gain greater adoption as the technology is already readily available at most merchants to accept payment. Whereas Apple Pay and Google Wallet require an entirely new NFC enabled payment terminal; a costly investment. Despite this cost, Apple Pay’s numbers are growing. According to Forbes, Tim Cook recently revealed that Apple Pay support has increased its supporting retail locations three-fold bringing the total number to 700,000 total locations. This is an impressive increase, however, it’s still a drop in the bucket compared to the total number of retail locations in the United States (6 Million).
Additionally, if Apple Pay’s consumer adoption numbers are any indication, CurrentC may have a chance to catch up on marketshare once it is finally released. Last Month, PYMNTS.com performed a survey on 1,000 users and found that only 6% of iPhone 6 users are actually using Apple Pay. This is likely due to a low percentage of retailers accepting the form of payment. Hopefully the release of the Apple Watch and an increase in supporting retailers will help increase adoption of the technology.
What are your thoughts on the matter? Should Best Buy have stayed their commitment and opposed Apple Pay? Or is a technology retailer making a smart move by enabling its tech-loving customers the right to choose their payment method? Let us know in the comments below.