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Best Buy’s Apple Pay adoption hands setback to MCX

Best Buy’s decision to begin accepting Apple Pay hands a setback to MCX, a mobile payment system that is the brainchild of the some of the largest United States retailers and that hoped to beat Apple Pay at its own game with brand muscle.

The consumer electronics retailer is letting customers buy items in-app with Apple Pay for home delivery or in-store pickup and will allow them by year’s end to pay by NFC with an iPhone 6 or iPhone 6 Plus at checkout. Best Buy’s decision suggests that Apple Pay has gained an edge over MCX in the months since it was launched as more and more merchants sign on as consumers adopt iPhones and Apple continues to show the ability to put a halo around its products.

“With a number of MCX partners set to see their exclusivity agreements expire this year, we can expect more consortium members to become Apple Pay compatible in coming months,” said Jordan McKee, senior analyst for mobile payments with 451 Research Mobility, New York. “Limiting payment options at the point of sale is a recipe for disaster, especially for a merchant like Best Buy, who sells Apple products.”

Providing options
Best Buy, Richfield, MN, said today’s consumers have many different ways to spend their money and should receive as many options as possible in how they pay for goods and services at Best Buy.

Best Buy wants to further enhance its mobile offerings.

To continue enhancing its mobile platform, Best Buy will open a technology innovation office in Seattle this summer to focus on using mobile tools to enhance the customer experience.

Best Buy’s fellow members of the Merchant Customer Exchange include Walmart, Sears, CVS and Rite Aid.

The companies banded together to develop a mobile payments system a couple of years ago after recognizing the potential in the space.

Besides simply giving consumers a way to pay for purchases in stores, the retailers hoped to hold onto control of the transactional data for their customers, information that marketers view as an important tool in optimizing their marketing strategies.

It could be confusing for consumers if more retailers with competing mobile payment systems adopt Apple Pay.

For instance, Target used Apple Pay in its iPhone app as it tested mobile payments application CurrentC in its stores.

CVS and Rite Aid turned off Apple Pay in their stores, presumably because they were members of MCX.

In a conference call following Apple’s release of fiscal second-quarter results, CEO Tim Cook called Apple Pay a highlight of the quarter.

“We’re seeing great momentum with Apple Pay,” Mr. Cook said.

In a sign of Apple Pay’s growing impact since launching last year, it now has the support of all four major credit card brands.

Discover Financial announced its cardholders in the United States will be able to use Apple Pay at participating merchants starting this fall, opening Apple’s mobile wallet to a larger market.

Discover had remained absent after Apple Pay launched in October with support from Visa, MasterCard, and American Express.

Sensible approach
Meanwhile, MCX has come under attack for terms in its contract that implement a fine for adopting a competing payments solution, although MCX has said members would not be fined.

Apple Pay’s addition will complement Best Buy app’s easy product browsing.

“Enabling payment choice and guiding consumers’ hands toward the preferred funding mechanism via incentives will be the approach sensible merchants subscribe to,” Mr. McKee said. “MCX will not have a chance at success if it continues to believe that stifling the competition is the way forward.”

Final Take
Michael Barris is staff reporter on Mobile Commerce Daily, New York