Apple Pay cancellation smoking gun

Karen Webster, writing for Pymnts.com:

Something CurrentC also doesn’t blab about, but is a well-known fact throughout payments-land, is that its contracts strictly prohibit its member merchants from accepting any other form of in store mobile payments scheme outside of its own. I would imagine that over the last two years, that’s probably led to more than one scary conversation between the “just-keep-my-cost-of-acceptance-low” Corporate Treasury folks and the “I-want-to-just-sell-more-stuff-in-my-stores-and-accommodate-my-customer’s-payments-preferences” marketing and merchandising folks when presented with compelling mobile payments schemes. Until Apple Pay, which has generated all sorts of hype and media attention, its member merchants probably felt that they weren’t too missing out on much since it wasn’t like its customers were walking into those stores asking to use a mobile payments scheme and were denied the opportunity.

Until last week.

And:

You don’t have to be a Rhodes Scholar to figure out that the abrupt about face at Rite Aid and CVS, CurrentC merchants, was the result of some sort of disconnect between the marketing peeps wanting to offer Apple Pay and the finance/treasury folks that signed the contracts a few years ago that said they couldn’t.

And, seriously folks, say what you will about Apple Pay and its long term prospects as a viable mobile payments scheme, but the spin about security concerns and data privacy concerns is not only spin, it’s not even believable spin given all that we know about Apple Pay and its security and privacy protocols.

And this, from the New York Times:

The problem is that under the terms of their MCX contractual agreement, they are not supposed to accept competing mobile payments products like Apple Pay, according to multiple retailers involved with MCX, who spoke on the condition of anonymity. If these retailers break their contracts, they will face steep fines for doing so, these people said.

If true (and it sure seems to be), this behavior is unconscionable. When the FTC has a moment free from their pursuit of AT&T, perhaps they’ll look into this. Feels like unfair trade practices to me.

[Hat tip to Stephen Tallent]

UPDATE: Upon reflection, and a lot of discussion, there certainly is plenty of precedent for MCX prohibiting Apple Pay. I think what rankles me here is the apparent lack of transparency. But even that might be constrained by an NDA. Hard to fault CVS, RiteAid, et al, for not being up front about a clause in their contract if the contract itself contains a non-disclosure provision. I can only imagine that this is the case, given the lack of publicly available information on MCX terms and conditions.

That said, any company that signs a deal like this, especially for a pig-in-a-poke restrictive system that does not yet exist, deserves what they get. My 2 cents.