CEO fires back as retailers block Pay
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[October 28, 2014]
By Deepa Seetharaman
LAGUNA BEACH Calif. (Reuters) - Apple Inc.
CEO Tim Cook fired back at CVS and Rite Aid on Monday after the
drugstore chains blocked the iPhone maker's mobile payments service,
saying there were plenty of other retailers around the world to sign up.
Apple Pay launched about a week ago and saw more than a million
credit cards registered over the first 72 hours. It already totes up
more transactions than all other "contact less" payment methods
combined, Cook said, citing Visa and Mastercard data.
Such services, through which a user pays by holding a smartphone
close to a specially designed terminal, have failed to catch on in
the United States despite the backing of Google Inc and other
News emerged over the weekend that the two retailers had opted out
of Apple Pay in favor of a rival system that roughly 50 chains,
including Wal-Mart and Best Buy, are developing for in-house use.
"We've got a lot more merchants to sign up, we've got a lot of banks
to sign up and we've got the rest of the world," Cook told the Wall
Street Journal Digital Live conference, in the company's most
extensive comments on the blockade so far.
In launching Apple Pay, the iPhone maker hopes to lock in more
customers for its mobile devices by enhancing their overall utility.
Industry experts say it stands a chance of becoming the first widely
used payments feature on smartphones.
CVS and Rite Aid have not explained their surprise move.
But the driving force behind developing a retailer-owned mobile
payment solution is to avoid paying credit card transaction fees to
card companies like Visa and Mastercard, analysts said. Fees range
between 2 percent and 3 percent of costs per transaction.
Rite Aid stopped accepting Apple Pay last week at its 4,572 stores.
Spokeswoman Ashley Flower said the company was evaluating various
forms of mobile payment technologies.
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CVS did not respond to queries seeking comment but a visit to two of
its stores showed that the NFC (Near Field Communications) reader on
which Apple Pay was used had been deactivated.
It remains to be seen, despite early signs of success, whether
mobile payments will become widely adopted.
Cook argued on Monday that Apple Pay offered better security and
privacy than competing services, and that retailers risked
alienating customers by limiting choices at checkout.
"It's a skirmish," Cook said in response to a question about the
"Merchants have different objectives sometimes. But in the long arc
of time, you only are relevant as a retailer or merchant if your
customers love you."
(Writing by Edwin Chan; Editing by StephenCoates)
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