Why So Many American Retailers Are Fighting to Freeze Out Apple Pay

MCX

MCX—the coalition of retailers at the heart of recent decisions to block Apple Pay—says it could eventually embrace that technology that drives Apple’s brand new payments service. But it seems that coalition will continue to freeze out Apple Pay—and all other payments services that compete with its own app, known as CurrentC.

During a virtual press conference on Wednesday, a representative of the organization said that MCX is “technology agnostic” and that CurrentC could “pivot” to NFC, the Near Field Communication tech that lets Apple Pay users send money from their iPhones to payment terminals in stores.

Basically, the organization is in damage-control mode. Over the weekend, according to reports, drugstore chains Rite Aid and CVS blocked the use of Apple Pay in their stores—basically by shutting down NFC readers—and it later emerged that these chains, as part of MCX, did so in anticipation of the arrival of CurrentC. CurrentC is built around QR code technology, not NFC.

But it’s still unlikely that MCX members—which also include WalMart, Best Buy, and the Gap—will let both Apple Pay and CurrentC coexist on their mobile payment systems. According to the New York Times , MCX members signed exclusivity CurrentC contracts years ago, back when no one knew about Apple Pay. If retailers break those contracts, the Times reports, they would have to pay steep fines.

MCX denied this claims in a statement released on Wednesday morning, and repeated that position during its conference call. “It’s simply not true. There are no fines,” a MCX representative said. But it still seems that members are contractually obligated to use CurrentC exclusively.

The final version of CurrentC is still months away—it’s set to launch in 2015—while Apple Pay is already here. And if Apple Pay is a success at other stores, MCX members could miss out on an incalculable number of mobile transactions, and risk turning customers off.

The only reason retailers might still choose CurrentC over Apple Pay are the benefits of tracking their customers’ shopping habits across all MCX stores—a database that has thus far been the sole domain of credit card companies. And if retailers had access to that data, they could potentially wield it to offer deals and loyalty rewards, increasing their bottom lines. Meanwhile, Apple Pay, essentially a contact-less form of paying by credit or debit, still leaves the retailer out of the loop and does nothing to change that dynamic.

Compounding its already poor image problem, MCX has also confirmed news of a data breach involving its system. Within the last 36 hours, according to the group, unauthorized third parties stole the email addresses of some CurrentC pilot program participants, as well as the emails of others who had expressed interest in the app.

No payment data or personal information had leaked, the organization says, and the CurrentC app itself was not affected. During the conference call, an MCX representative said the company was continuing to investigate the situation and it was “premature to comment” on why it was just CurrentC tester email addresses that were stolen. “In the digital age, some people think it’s cool to hack,” the representative said. Yes, and sometimes they hack organizations they’re unhappy with.