Apple Pay gets dose of bad news as Rite Aid, CVS turn it down

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The two big pharmacy chains say they won't permit Apple's new mobile-payment system at their stores

Less than a week into its launch, Apple Pay has hit a rough patch: Rite Aid and CVS announced they will not be using the mobile payment system. Huge retailers like Target, McDonald’s and Disney are still using the system, but the two big pharmacy chains’ decision not to participate could put a major crimp in its adoption.

Going a step further, both retailers shut out all e-pay systems, including Google Wallet. The companies’ motivation may be the same as Best Buy’s and Wal-Mart’s, two more Apple Pay holdouts.

The Atlantic reports speculation that the two chains disabled the system to clear the way for Current C, which TechCrunch described as big retail’s "clunky attempt" to compete with Apple Pay. Clunky or not, Wal-Mart is a retail megapower. Whatever system it goes with should have some immediate traction. Not only that, Current C completely cuts out the credit-card companies.

Apple’s website currently shows Apple Pay is being used by 34 retailers. But a closer look reveals that eight of those partners are different versions of Foot Locker, and one is Apple itself. A look at Current C’s website shows it has 46 partners, including Wal-Mart and almost every major U.S. gas-station chain. 

While the jury is still out on whether consumers will embrace Apple Pay, that question could be moot if enough retailers opt out of the system altogether. 

Some partners like Coca-Cola remain loyal to Apple Pay. More than 700,000 vending machines in the United States currently accept Apple Pay. 

"We process thousands of contactless transactions each week, but it’s still a drop in the bucket compared to what we think it will be," said Rick Kanemasu, Vending Technology Strategy consultant with Coca-Cola. Mobile payments today account for from less than 1 percent of our U.S. vending transactions, but we expect that number to grow to 10 to 20 percent of by 2020."

While sites like TechCrunch and Business Insider might agree that Apple Pay is the better system, it’s far from clear who will win the war. One advantage Apple has is that it operates on NFC technology, so its system can be used in any store that accepts credit cards (and doesn't block it). Current C can only be used in participating stores.

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