How the Competition Made Apple Pay Stronger

Apple is sitting pretty right about now. It’s been a few short weeks since the company launched its mobile wallet endeavor and Apple Pay has already grown into the most widely used mobile payment system available. The company announced that over one million credit cards had been activated on Apple Pay within the first 72 hours. Then, the competition gods smiled upon Apple when, the next day, Merchant Customer Exchange (MCX) announced a security breach.

MCX, a merchant-owned mobile commerce network, waged war against Apple this fall by rivaling its mobile payment system with a similar service, CurrentC, to be released in 2015. Rather than using Near Field Communication (NFC), which is a form of wireless communication on a short range, like Apple Pay, CurrentC will use QR codes to initiate and verify transactions. Either customers will scan a code with their phone displayed at the cash register, or cashiers will scan a code from a customer’s phone. Another differentiating feature of CurrentC is that the system will apply discounts and use loyalty programs. Furthermore, unlike Apple Pay, CurrentC will contain ads.

Taking a page out of Google’s book, CurrentC tracks customer buying patterns to create targeted promotions and advertising. Google designed Google Wallet to know what consumers search for and buy so that it can turn a profit through targeted ads and its Google Shopper platform. These advertising prospects seem exploitative of customers. Apple Pay doesn’t have to make these compromises, though, because the technology is directly hardwired into its *newest* products, which is where the company brings in the big bucks.

Companies part of MCX like CVS, 7-Eleven, Best Buy and Wal-Mart, have boycotted Apple Pay by disabling their preexisting point-of-sale technology in their stores. This is due to their exclusivity agreements with MCX; even if they want to use Apple Pay, they contractually cannot. However, grocery store chain Meijer, is both a MCX member and Apple Pay partner, which means that the exclusivity agreements are about as solid as MCX’s security system.

What’s more, CurrentC has been criticized for being difficult to use as QR codes require additional authentication measures and function more like a gift card rather than a credit card. CurrentC draws money from customers’ checking accounts (think PayPal) rather than directly transmitting credit card information through NFC. Not only is this transaction not as seamless as Apple Pay, but it is also only beneficial to retailers, as they avoid credit card processing fees through this method. Consumers shouldn’t need to inconvenience themselves to save retailers money. While MCX is a company created by retailers, it should understand that the customer’s needs always come first.

Although a recent report noted that Apple Pay has helped Google Wallet’s transactions increase by 50 percent – similar to how the Apple Watch announcement may have boosted Google’s wearable sales – the “self-interested” (Tim Cook’s words, not mine) features of its competitors have put Apple Pay in the lead when it comes to mobile payment technology.

“Fast, secure, and private” was Apple Pay’s slogan when the company first introduced its technology to the world. Apple’s habit of not being the first, but the best, has proven fruitful over the years, and so far Apple Pay is no exception. The brand has once again tapped into its customers’ desires and its competitors’ failures to build a promising mobile payment system, and is once again right where it wants to be: at the intersection between exclusivity and monopoly.