Just hours before Apple's (NASDAQ:APPL) expected announcement of the a new iPhone release, reports claim the electronics developer entered into partnerships with CVS (NYSE:CVS) and Walgreens (NYSE:WAG) to provide a mobile payment option called the "iWallet."
With more than 15,000 locations combined, Walgreens and CVS—the two largest drugstore chains in the United States—will give Apple's new mobile payment system a lot of initial juice by accepting the purchasing platorm in their stores, reported Re/code.
Apple would not only be advantaged by the amount of consumers using the service, but also by the increase in purchases the partnerships would bring. Consumers could conceivably shop weekly, if not daily, at the drugstores, acclimating customers unfamiliar with mobile payment over time and creating an important revenue source for Apple.
Mobile payment transactions are expected to be simple in practice. Theoretically shoppers will make a purchase simply by waving or tapping a phone at checkout terminals using wireless technology called near field communication (NFC), which Apple has never utilized previously. The new payment system may also include fingerprint identification, a function already available on the latest iPhones as a security measure.
Thus far, U.S. shoppers have not widely embraced mobile payment options, but the new model is still trending among retailers. Commerce transactions completed on mobile phones and tablets in the U.S. are expected to total $114 billion in 2014, according to a Forrester Research online retail forecast conducted in May. And many retailers, such as Starbucks (NASDAQ:SBUX), have already seen success. The coffee chain reported that 14 percent of its purchases are conducted on mobile apps.
It's unknown whether CVS still plans to make use of MCX, a competing mobile payment system backed by other retailers such as Target (NYSE:TGT) and Walmart (NYSE:WMT) that uses barcode scanning instead of NFC.
Most recently, Apple reached an agreement with a number of card-issuing banks so that the iWallet registers lower, "card present" transaction fees, reported Apple Insider. American Express, Visa and Mastercard are all rumored to be on board for the launch of iWallet.
-See this Re/code article
-See this Apple Insider article
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