CVS and Rite Aid are among 220,000 U.S. merchants that have technology in place to read the short-range wireless signals that enable customers of Apple Pay or similar services to make a purchase by waving their smartphones.
"This act by CVS and Rite Aid heralds the advent of the imminent battle in the mobile pay system," said Anindya Ghose, a marketing and information-technology professor at New York University.
Spokesmen for CVS of Woonsocket, R.I., and Rite Aid of Camp Hill, Penn., didn't respond to requests for comment. CVS has about 7,700 retail pharmacies and Rite Aid has about 4,570.
"The feedback we are getting from customers and retailers about Apple Pay is overwhelmingly positive and enthusiastic," said Trudy Muller, a spokeswoman for Apple. "We are working to get as many merchants as possible to support this convenient, secure and private payment option."
At stake is a market that's projected to jump to $90 billion in 2017 from $12.8 billion in 2012, according to Forrester Research Inc. Apple's entry into mobile payments follows efforts by Square Inc., Google Inc. and Softcard — a wallet application backed by the three largest U.S. wireless carriers — that all failed to gain widespread appeal.
Apple Chief Executive
CVS and Rite Aid are part of a consortium of retailers called the Merchant Customer Exchange that has been working on its own mobile payment system to help bypass credit card companies. The group's system, called CurrentC, is in pilot tests in select locations across the country with plans for a national rollout next year. Network members include
Apple's strategy is the opposite. It partnered with the major banks and credit card companies —
Apple Pay works on the company's new iPhone 6 and 6 Plus, which have so-called near-field communication technology built in. The big catch for Apple is that merchants have to upgrade their credit and debit card systems to read those short- wave signals.
Credit-card issuers are pushing U.S. merchants to upgrade their payment terminals within the next year to accept chip-based debit and credit cards, which are usually capable of handling near-field communications technology. The deadline for merchants to make the switch is October 2015; about 220,000 U.S. stores have done so, out of more than 10 million. The upgrade costs $500 to $1,000 per checkout terminal, according to Javelin Strategy & Research.