Retail skirmish blocks Apple Pay at checkout line

Plan on paying in stores with your shiny new iPhone 6? Not so fast.

Retailer resistance to Apple Pay had been expected because Apple hasn't offered incentives to install pricey point-of-sale terminals and train staff on its new mobile payment system. But the decision to not accept Apple Pay by some retailers that already have contactless terminals in the checkout line is a skirmish rooted in competition.

Big merchants like McDonald's, Macy's and Foot Locker are all accepting Apple Pay. But a consortium of retailers called Merchant Customer Exchange plans to offer a rival mobile payment system next year that could direct-debit customers' checking accounts, instead of using a credit card. It also will be designed to track customer buying patterns to be able to offer targeted promotions.

In the meantime, some of the group's biggest members, like CVS, 7-Eleven, Best Buy and Wal-Mart, are nixing so-called "near-field communication" (NFC) payments even though they already have the point-of-sale technology in stores. Other retailers that aren't part of the exchange, such as Starbucks and Taco Bell, are opting to develop their own mobile payment services, and so aren't taking Apple Pay either.

Retailers in the exchange "are certainly going to give it a go on their own; they spent the last few years and money developing this," said eMarketer analyst Bryan Yeager. Although nascent, the appetite for mobile payment is growing. Mobile commerce is expected to total $305.7 billion in 2014, up 15.7 percent from the prior year, eMarketer said.

Apple Pay launched Oct. 20. Last Monday, Apple CEO Tim Cook said the new system had over 1 million activations in its first three days. "We've got a lot of merchants to sign up, a lot more banks to sign up, and we have the whole rest of the world," he said.

By next October retailers will be required to have point-of-sale terminals that work with the new EMV (Europay, MasterCard, Visa) chip-and-pin security standard for credit cards. Those terminals usually also have the NFC capability to work with Apple Pay, Google Wallet and Softcard systems, but they aren't automatically enabled to work with NFC. Is it really in retailers' interest to block customers from using mobile wallet services other than their own?

"Blocking mobile pay providers will deprive consumers of their preferred method of payment," said Jason Oxman, CEO of the Electronic Transactions Association, a trade organization. "With more than 300 million mobile devices in American consumers' pockets, the future ubiquity of mobile payments is certain."