Apple Pay continued to make major inroads into the retail payments ecosystem this week, landing a major retail chain and the last holdout of the card provider networks. Best Buy and Discover are now in the fold.
In a big coup, Best Buy signed on for Apple Pay. This is significant because Best Buy is a longtime supporter of the Merchant Customer Exchange, a group of retailers developing a mobile payment app called CurrentC, reported PaymentsSource. Best Buy will remain part of MCX. Other large retailers have balked at accepting Apple Pay.
"Best Buy remains a strong MCX partner and supporter of the CurrentC initiative…We understand–and strongly support–our merchant partners' quest to do what's best for their customers," said Scott Rankin, MCX's COO. "As we have stated in past, we are of the firm belief that there need to be at least two to three major players within the mobile payments ecosystem for it to succeed. We remain steadfast and passionate about CurrentC, as well as completely focused on delivering the best mobile commerce solution for our merchant partners and for consumers."
Best Buy's embrace of Apple Pay is also significant because it had stopped using Near Field Communications in 2011, saying that it did not want to pay the cost of supporting NFC. But times have changed for the electronics chain, according to Tim Cook, Apple's CEO.
"Best Buy, which has been a longtime strong partner of ours, has just announced that it's now offering Apple Pay in-app and later this year will offer Apple Pay in all of their U.S. stores," Cook said in an April second-quarter earnings conference call. An update for in-app purchases is now live in the App Store.
The electronics retailer wants to provide customers with as many options as possible in how they pay for goods and services, Best Buy said in a statement. The company plans to open a technology innovation office in the Seattle vicinity to work on mobile technology.
Meanwhile, Discover Financial Services signed a deal with Apple to enable Discover credit and debit cardholders to use Apple Pay. This is an important step for Apple Pay as Discover was the last of the major credit card networks to participate, according to the Associated Press. It joins Visa, MasterCard and American Express.
"As the mobile payments landscape matures, Discover remains committed to giving card members secure options for using their cards and mobile devices," Diane Offereins, Discover's president of payment services, said in a press statement.
The terms that Apple has in place with the credit card companies for utilizing Apple Pay are undisclosed, according to Forbes. However, the AppleInsider blog said that Apple takes 15 basis points from the networks' share of each transaction. One basis point is equal to 0.01 percent, which means Apple takes 0.15 percent of the networks' share of each transaction.
Apple likely negotiated similar terms to what it has with other card networks with Discover, TechCrunch said. Discover's existing services for cardholders, such as a 5 percent cash back bonus, will apply when users activate their cards on Apple Pay.
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