Apple Pay Blocked at Rite Aid and CVS in Favor of QR Code Payments

Image: Jordan Strauss/Associated Press

The list of retailers supporting Apple Pay during its launch in September was long and impressive, but in the weeks following the launch, some major retailers have reportedly blocked the service in favor of a competing option set to debut in 2015.

According to user reports cropping up on Twitter, earlier this week, Apple Pay was operational at NFC terminals at Rite Aid and CVS, both non-Apple Pay partners, but was reportedly disabled over the course of the last 48 hours.

@Ihnatko Starting 10/25, the NFC payment system will be deactivated on all CVS payment terminals. No more Apple Pay or Google Wallet.

- Jonathan Sprewell (@jsprewell) October 25, 2014

In one Twitter message (see above), a person who claiming to be an employee of CVS said that the company disabled NFC payments as of Saturday, a move that would also prevent Google Wallet users from using NFC payments.

Similarly, another user went into great detail on his personal blog explaining how Rite Aid accepted his Apple Pay transaction on Wednesday, but blocked it on Thursday.

'When the cashier realized what I had done, she kindly informed me that Apple Pay isn't supported at Rite Aid-that the store had received an email just today to that effect,' wrote user Josh Hudnall. 'When I mentioned that I had paid successfully the night before, she just laughed...'

That change in policy was more clearly outlined in a leaked memo, revealed on Friday by Slashgear, which stated, in part:

Please note that we do not accept Apple Pay at this time. However we are currently working with a group of large retailers to develop a mobile wallet that allows for mobile payments attached to credit cards and bank accounts directly from a smart phone. We expect to have this feature available in the first half of 2015.

If customers attempt to pay for a transaction with Apple Pay, a message will prompt both customer and cashier for a different form of payment. Please instruct cashiers to apologize to the customer and explain that we do not currently accept Apple Pay, but will have our own mobile wallet next year.

In a statement made to iMore on Saturday, a Rite Aid spokesperson did not specifically comment on the blocking of Apple Pay at stores, but did address the company's stance on the service.

'Rite Aid does not currently accept Apple Pay,' the spokesperson told the site. 'We are continually evaluating various forms of mobile payment technologies, and are committed to offering convenient, reliable and secure payment methods that meet the needs of our customers.'

The payment system mentioned in the alleged leaked Rite Aid memo is a solution developed by Mechart Customer Exchange (MCX) called CurrentC. In addition to Rite Aid, other confirmed major retailers included in the system will be CVS, Kmart, Sears, Target, Walmart, Best Buy and 7 Eleven, the cream of the crop of mainstream retailers in the U.S.

CVS and Rite Aid were content to have NFC readers doing basically nothing for months, but pull them a week after Apple Pay?

- Tom Hollingsworth (@networkingnerd) October 25, 2014

Although the moves by Rite Aid and CVS may have upset some users, those sentiments are likely to have limited impact as Apple Pay is still in its infancy, without a secure foothold in most stores.

Interestingly, aside from the effects on Apple Pay and Google Wallet, CurrentC could end up having an impact on the overall adoption of NFC in the U.S., at least for now.

Instead of using NFC, CurrentC, which will be used at 110,000 merchant locations across the U.S., uses an app and QR codes that can be scanned by the merchant or the customer to facilitate transactions, accessing merchant debit cards, rewards programs or your bank account for payments, without the need of NFC terminals.

Such a closed system would allow merchants to avoid paying credit card processing fees and give them more information about customers However, it will also introduce a hurdle - QR codes - that haven't proved to be very successful in the past. This is particularly significant when juxtaposed against the tap-to-pay ease of use of Apple Pay. (At present, the CurrentC app has a one-star rating in the iOS app store.)

How this new mobile payments cold war will shake out is unclear at this point, but what these moves by CurrentC retailers indicates is that Apple Pay may have a much more difficult time gaining mainstream traction than originally thought.

Have something to add to this story? Share it in the comments.