Just when we thought mPayments Fragmentation was ending, ApplePay gets a Walmart, Best Buy Setback

When ApplePay was launched this past tuesday, it was exclusively mentioned that 83% of US card issuers are already on board. Also it was brought to notice that 220,000 stores would be supporting the mobile payment initiative at launch, including big names like McDonalds, Walgreens, Staples and Disney. There is setback though as Walmart and Best Buy are abstaining from adopting the NFC method of payment in favour of another mobile wallet application. We all are aware of the scalability these two players possess in the retail sector.

Using NFC requires retailers to install readers at checkout counters in order to accept payments. In US, only 10% of merchants are using such readers. Best Buy did have NFC readers installed back in 2011 across many stores but it was getting too expensive to manage. The retailer has clearly that it doesn’t wish to follow the same path again.

NFC mobile payments have suffered in the past because smaller merchants are reluctant to install the required systems. The reader devices can cost $300 to $500 per unit and with few consumers using them, they aren’t viable options. Moreover, merchant fees for mobile-payment systems might actually be more than that of plastic cards, particularly for debit cards.

Both Walmart and Best Buy are backing a mobile technology group owned by retailers, called the Merchant Consumer Exchange (MCX). MCX is due to launch a mobile wallet application in 2015 called CurrentC. The application would require only a software download instead of checkout counters and can be used across any of the Android and iPhones models available. It’s a known fact that ApplePay would only be available for the iPhone 6 models. CurrentC will connect to consumers’ checking accounts, retailer gift cards and some retail credit cards but won’t work with traditional credit cards.

Also, Checkout systems from popular payment service providers like Square , Amazon and PayPal aren't equipped to process NFC payments, meaning potentially millions of shops and corner stores won't be accepting Apple Pay when it launches next month.

Although Apple does have a successful track record of pushing existing technologies or services into the mainstream. Apple already has made collaboration with Visa, MasterCard and Amex. These credit card networks are already pushing retailers to install payment terminals that accept credit cards embedded with chips. Merchants are supposed to perform the up gradation by October 2015. In this process, merchants can also opt for terminals with contactless capabilities but it’s up to Apple to convince this merchant base.