Why CVS and Rite Aid are blocking Apple Pay

I drove my iPhone 6 to Walgreens last week to buy a tube of toothpaste.

I usually buy that kind of stuff at CVS, which is closer and open 24 hours a day. But Walgreens had Apple Pay, and I was eager to give Cupertino’s new swipe-and-pay system a whirl.

Turns out I could have gone to CVS that day. They weren’t part of Apple’s rollout, but according to team Re/code, Apple Pay worked like a charm on CVS’ checkout scanners too.

Or it did until CVS, Rite Aid and a host of other retailers turned their scanners off.

They are part of a Walmart-led consortium called MCX (Merchant Customer Exchange) that’s backed a different technology: Not the NFC (near-field communications) system that Apple (and Google) adopted, but those square QR (quick response) codes that look like the fingerprints a robot might leave.

Think about what they’re doing.” wrote Daring Fireball’s John Gruber on Saturday. “They’re turning off NFC payment systems — the whole thing — only because people were actually using them with Apple Pay. Apple Pay works so well that it even works with non-partner systems. These things have been installed for years and so few people used them, apparently, that these retailers would rather block everyone than allow Apple Pay to continue working.”

This Apple Pay boycott seems like a bad idea. Not only are those QR codes clunkier than NFC, but the technology is relatively easy to hack. Alipay, a subsidiary of e-commerce giant Alibaba, pioneered the use of QR payments for smartphones in China until hackers started inserting malicious Trojan horses into the codes. The Chinese central bank stepped in last March and ordered Alipay to stop using the technology.

“I don’t know that CVS and Rite Aid disabling Apple Pay out of spite is going to drive customers to switch pharmacies” writes Gruber. “But I do know that CurrentC is unlikely to ever gain any traction whatsoever.”

CurrentC is the app MCX developed for use on smartphones. Josh Constine gave it a close look in Techcrunch yesterday and came to the same conclusion Gruber did: It’s a system designed not to make consumers’ lives easier, but to do an end run around the credit card companies. The killer quote, attributed to former Walmart CEO Lee Scott: