Apple’s (NASDAQ:AAPL) CEO Responded Boldly as Retailers Block Apple Pay

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By Thomas Copeland on October 28, 2014 Intl News

Chief Executive Officer of Apple Inc (NASDAQ:AAPL) Tim Cook adopted an aggressive approach on Monday towards the retailers CVS (NYSE:CVS) and Rite Aid (NYSE:RAD), which at their drugstore chains have restricted the use of payment service Apple Pay through smartphones. Tim Cook made it clear during a live conference in Laguna Beach, California that there are a large number of retailers around the globe anxious to adopt his company’s payment services.

Cook looked confident when he presented the statistics taken from Visa (NYSE:V) and Mastercard (NYSE:MA) data that Apple’s service had undertaken more transactions as compared to all other similar ‘contact less’ payment methods. More than a million credit cards registered for Apple Pay in the initial 72 hours of launching the service about a week back. However, despite the backing of big and dominant players including Google Inc (NASDAQ:GOOG), such services have not received a very positive response in the United States. Utilizing these services, a user is able to make payments for merchandise or services through his smartphone by taking it closer to exclusively designed terminals.

Apple Pay will soon face a competitor system in the market which almost 50 retailers including Wal-Mart (NYSE:WMT) and Best Buy (NYSE:BBY) are in the process of developing for their internal usage. Both the retailers have backed out from Apple Pay to join this system. So Cook made a few serious comments during the Wall Street Journal Digital Live conference confirming that there is a long list of companies and a number of banks that are ready to join, in fact whole rest of the world is ready to join Apple Pay.

Apple (NASDAQ:AAPL), the iPhone maker, while introducing Apple Pay was hopeful that it will be able to attract additional customers for its smartphones due to general enhancement of features. Now it is believed in the industry that it might become the first extensively used payments method utilizing smartphones. Despite all, CVS and Rite Aid have not released any statements on the issue.

However, the incentive for developing an exclusive mobile payment system of their own for retailers is to evade credit card transaction fees payments to card companies like Visa and Mastercard, which charges from 2 percent to 3 percent of cost on each transaction. On the last weekend, Rite Aid’s 4572 stores stopped taking payments through Apple Pay stating that many other types of mobile payment technologies are under assessment by the company. On the contrary, CVS had not made any comments but the Near Field Communication (NFC) readers for Apple Pay were found non operative during a visit at two of their stores.

Apple’s (NASDAQ:AAPL) CEO Tim Cook claimed that security features and privacy controls are much superior in Apple Pay than any of its competitors. Moreover, the retailers by restricting choices at checkouts were taking risk of annoying their customers. He indicated conflict situation may arise with retailers who had other vested interests and in the longer run merchants require satisfied customers, which complex payment systems cannot provide.