Why Walmart and Best Buy aren’t backing Apple Pay

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When Apple Pay was unveiled Tuesday, Eddy Cue was quick to mention that 83% of US card issuers are already on board. 220,000 stores will also support the mobile payment initiative at launch, including big chains like McDonalds, Walgreens, Staples, and of course, Disney.

But that doesn’t mean Apple Pay’s adoption will be smooth sailing going forward. There are still plenty of merchants that haven’t signed on, and some of the biggest names, including Walmart and Best Buy, don’t plan on supporting Apple Pay any time soon.

Both Walmart and Best Buy have no plans to equip their stores with NFC scanners, according to The Wall Street Journal. The iPhone 6, 6 Plus, and Apple Watch utilize NFC to process mobile payments.

A Best Buy spokesperson told the Journal that it installed NFC checkout systems years ago, but eventually ditched them because they cost too much to maintain. Google Wallet and other services have been trying to get NFC payment processing off the ground for years, but adoption in the US has remained stagnant.

The real reason Best Buy and Walmart won’t be supporting Apple Pay is their allegiance to a retailer-owned mobile commerce network called Merchant Customer Exchange. MCX uses an iOS and Android app called CurrentC that involves the customer scanning a QR code instead of using NFC’s tap-and-pay. It’s basically a cross-platform take on Passbook. The app will be available nationally next year.

The mobile payments race in the US will be between Apple Pay and MCX. Photo: Roberto Baldwin/The Next Web.
The mobile payments race in the US will be between Apple Pay and MCX. Photo: Roberto Baldwin/The Next Web.

Other MXC partners include Target, 7-Eleven, Southwest Airlines, Gap and Shell.

What’s interesting is that Target is a MXC and Apple Pay partner. During Tuesday’s keynote, Apple Pay was demoed running inside Target’s iOS app.

Even though the likes of Walmart and Best Buy aren’t on board now, there’s good a chance that Apple Pay will become more ubiquitous over the next year.

US financial institutions are forcing merchants to support electronic EMV credit cards or risk liability for fraudulent card activity and identity theft. Point-of-sale terminals must be upgraded by October of 2015, and PandoDaily posits that the timing is perfect for Apple. “And when these merchants shell out for new card-readers, something they might do at most once or twice per decade, there’s a good chance they’ll opt for all the ‘bells and whistles.’ Following Apple’s announcement, NFC is right at the top of the list of must-support technologies.”

Banks have been beyond excited to support Apple Pay, with some undergoing extreme measures to keep their involvement a secret. Apple has convinced card issuers that its combo of Touch ID and NFC is the most secure option that in turn dramatically reduces the risk of fraud. That’s why Apple will reportedly earn 15 cents of every $100 spent using Apple Pay, an unprecedented rate that no other company has managed to get.

Apple Pay launches in October, and more merchants and banks will be brought on board as the service rolls out in the US.