Apple Pay merchant acceptance received two significant boosts with CVS and 7-Eleven announcing plans to support the mobile payment platform. The addition of CVS was particularly notable because the retailer had previously resisted Apple Pay in favor of its own barcode-based CVS Pay solution and had participated in the retailer-backed CurrentC initiative. Its decision to embrace Apple Pay signaled an important shift in the competitive mobile payments landscape.
CVS and 7-Eleven also represent the types of merchants where in-store mobile payments could offer a strong value proposition. Both serve customers making frequent, relatively low-value purchases where speed and convenience are important. However, expanding acceptance alone does not guarantee greater usage. Consumer awareness, merchant promotion, and incentives to change established payment habits remain critical to increasing Apple Pay adoption.
Apple Pay adds two major retailers as future spots for customers to use the smartphone payment method. As the following TechCrunch story reports, both CVS and 7-Eleven have signed up to accept Apple Pay later this year.
Longtime Apple Pay holdout CVS will finally be adding support for Apple’s mobile payments platform this fall, along with 7-Eleven, Apple CEO Tim Cook said this afternoon on the company’s earnings call.
The news is particularly notable because CVS was one of the first major retailers to snub Apple Pay, choosing instead to launch its own barcode-based mobile payments solution “CVS Pay” back in 2016, following the failure of the retailer-backed Apple Pay rival CurrentC.
CVS Pay had become the first mobile payments solution the pharmacy chain adopted, after having purposefully avoided support for Apple Pay or any other rival NFC (tap to pay) technologies at its register. The company believed there was value in offering its own end-to-end solution to customers that combined both payments and loyalty, it had said.
In addition, CVS had earlier backed an Apple Pay alternative called CurrentC, which was developed by the merchant consortium MCX, led by major retailers like Walmart, Best Buy, Rite Aid and others. The QR code-based payments solution was designed to challenge Apple’s potential dominance in mobile payments. Many of the retailers even blocked Apple Pay at their stores in advance of bringing CurrentC to market.
That it has now decided to also support Apple Pay is a major win for Apple, as is the addition of 7-Eleven to the list of retailers that will soon offer Apple Pay at checkout.
Two nice wins for Apple at merchants that are sweet spots for mobile payments—quick stop shopping for mostly low dollar items in high traffic areas. Now if only mainstream consumers would take to in-store mobile payments. Mercator’s CustomerMonitor Survey Series as well as other payment studies have shown sluggish or no growth for Apple Pay. Merchants do so little promotion for in-store mobile payments that many shoppers don’t even know they are accepted. Meanwhile, only the most ardent mobile app users seem to be trying mobile pay on a regular basis, say 3 or 4 times a month. So while it’s nice to add more mobile pay acceptance locations, real growth will come when payment providers adopt a more proactive and engaging marketing campaign.
Adding CVS and 7-Eleven to the Apple Pay merchant network expands the number of everyday situations where consumers can choose their smartphones at checkout. It also demonstrates how retailer attitudes toward third-party mobile wallets can evolve as consumer payment options and expectations change.
The larger challenge is converting broader Apple Pay merchant acceptance into regular consumer usage. Merchants and payment providers may need to more actively promote mobile payments and demonstrate their benefits at checkout. Without stronger consumer engagement, adding acceptance locations can expand Apple Pay’s potential reach without necessarily producing a corresponding increase in transaction volume.
Overview by Raymond Pucci, Associate Director, Research Services at Mercator Advisory Group
