Tim Cook blasts CVS, Rite Aid over Apple Pay blockade: ‘You only are relevant if your customers love you’

“Apple Inc. CEO Tim Cook fired back at CVS and Rite Aid on Monday after the drugstore chains blocked the iPhone maker’s mobile payments service, saying there were plenty of other retailers around the world to sign up,” Edwin Chan reports for Reuters. “Apple Pay launched about a week ago and saw more than a million credit cards registered over the first 72 hours. It already totes up more transactions than all other ‘contact less’ payment methods combined, Cook said, citing Visa and Mastercard data.”

“News emerged over the weekend that the two retailers had opted out of Apple Pay in favor of a rival system that roughly 50 chains, including Wal-Mart and Best Buy, are developing for in-house use,” Chan reports. “‘We’ve got a lot more merchants to sign up, we’ve got a lot of banks to sign up and we’ve got the rest of the world,’ Cook told the Wall Street Journal Digital Live conference, in the company’s most extensive comments on the blockade so far.”

“Cook argued on Monday that Apple Pay offered better security and privacy than competing services, and that retailers risked alienating customers by limiting choices at checkout,” Chan reports. “‘It’s a skirmish,’ Cook said in response to a question about the retailers’ moves. ‘Merchants have different objectives sometimes. But in the long arc of time, you only are relevant as a retailer or merchant if your customers love you.'”

Read more in the full article here.

MacDailyNews Take: Apple Pay already totes up more transactions than all other ‘contact less’ payment methods combined.

Boycott CVS and Rite Aid and any other company that willfully turns off NFC in a effort to block the vastly more secure, much more private, and far easier-to-use Apple Pay service.

• Email complaints to CVS Customer Relations here.

• Email complaints to Rite Aid Customer Relations here.

Related articles:
Seeking personal data, Walmart, Best Buy, and others won’t let shoppers enjoy Apple Pay privacy – October 27, 2014
Boycott CVS and Rite Aid – October 27, 2014
Bad business: CVS and Rite Aid antagonize their most well-heeled customers by blocking Apple Pay – October 27, 2014
CVS stores reportedly disabling NFC to shut down Apple Pay – October 25, 2014
iPhone users earn significantly more than those who settle for Android phones – October 8, 2014
Yet more proof that Android is for poor people – June 27, 2014
More proof that Android is for poor people – May 13, 2014
Apple’s iOS dominates in richer countries, Android in poorer regions – March 25, 2014
Twitter heat map shows iPhone use by the affluent, Android by the poor – June 20, 2013
iPhone users smarter, richer than Android phone users – August 16, 2011
Yankee Group: Apple iPhone owners shop more, buy more, remain more loyal vs. other device users – July 20, 2010


    1. Tap-to-pay is hardly new here, so Apple Pay might be be a harder sell — assuming it will arrive at all, outside of jumping through hoops as is the case now.

      Selling Apple Pay here would have to emphasize its security, not its ease of use.

      1. There’s a minor ease-of-use advantage where you probably already have your phone out while waiting in line to pay, so you wouldn’t have to pull out your wallet and fish out your card.

        The flip side is, customer loyalty accounts can also be integrated with said credit card (or worse, come in a separate stripe-only card), so unless Apple’s NFC supports these tangential uses the same day ApplePay is introduced in Canada, you have to fish out that wallet anyway.

        1. You actually carry around your loyalty cards? I have been using CardStar for years. Haven’t had to carry a loyalty card for 4-5 years now. So, no, some of us are actually already on our phones – this would save me from fishing out both my phone and my wallet (current situation).

          1. I only carry a single physical loyalty card, for Aeroplan (like air miles), which is magstripe-only. The card itself is only ever used at the gas pump before pre-authorizing payment with my credit card. Most pumps here now have card readers which include chip+PIN and sometimes NFC too, but no pumps here have a barcode scanner, so CardStar would be of no use to me unless I go pay inside at the cashier’s.

            My supermarket “loyalty card” is the same as my NFC+chip-equipped credit card since they’re run by the same company. When paying at their stores I tap once for the system to update the loyalty points, and if I’m not redeeming then I tap again for credit card payment. Literally 5 seconds.

      1. $300. That is the actual annual value of each “active wallet” (a customer with detailed purchasing history and personal data) to these retailers. You, me, everyone here who regularly shops at these chain stores, they make $300 per year on each and every one of us who pay with our credit cards and/or scan our loyalty cards. And I’m not talking about profit from the purchases we made; $300 is the actual advertising value of our “active wallet”.

        I was in shock when I discovered that number the other day.

        1. The number was actually reported by Bloomberg, and it was a quote from an analyst:

          “The one who enrolls is the one who controls” the data and the ability to deliver ads and offers, said Richard Crone, chief executive officer of Crone Consulting LLC. “We figure that is worth $300 per active wallet user per year. To put that in perspective, that’s twice the gross revenue that a bank makes on a checking account.”

    1. No, they would like cash. If you have to buy there, use the card that will charge them the most for the transaction. Not sure, it may be the American Express card. Which ever it is, use that card!

      Avoid boycotts, just do what works best for your family. Maybe avoid using the card system they are developing and just say, “I would rather use ApplePay!” if they asked.

      1. Yeah some of the MCX retailers, I shop at.. and will continue to use. but.. use their MCX/CurrentC card at? never..

        Not going to boycott someone because they don’t use a brand new way to pay for their goods, by a competitor. (Apple is a competitor to MCX now)
        Won’t eat McDonalds over Wendy’s.. just cause McDonalds supports  Pay.

        I will bet that at some point many of the MCX retailers will begin to accept  Pay though.

      2. Wrong Jersey. The value they get from knowing who you are, tracking your purchases, and having other data from you to use is worth far more than the small amount they pay in credit card fees.

        And many of you keep touting 3% merchant fees. The big retailers do not pay that high of a fee. They negotiate much lower fees.

  1. On Apple Pay does the retailer know what kind of card you are using? We accept AMEX for a few big clients and we take the hit on the higher charges, but for smaller transactions we just don’t want to accept it. In a few rare instances we’ll offer it but say that we will charge the difference in extra charges. If Apple pay doesn’t give you the option and the customer uses a card it would be too late. I can see instances where merchants wouldn’t want that. Of course, I don’t know what level of control a merchant has as to what is accepted and when. Not that I see that being the reason here, if they didn’t want credit card charges they wouldn’t just turn off wireless transactions.

    1. From my understanding, they don’t. All they get is a fake number (the token), which ApplePay service then transfers to the issuing bank, which then decodes it into a proper credit card account.

      As for the card issuer charges to merchants, I’m not really sure if your merchant agreement with AmEx really does allow you to pick and choose when you want to accept it and when not. As a customer, I know I am encouraged by the American Express to report to them any merchant that refuses to take American Express, even though they are officially accepting it. They also want me to report it if I am being charged a different price just because I’m paying with the AmEx card.

      1. We apply a charge for all card transactions – and that charge is higher because of the stupid charges applied by AMEX. In the case of AMEX it got to the point where we stopped using them, also because each month they would put a random charge on our account which they had agreed to waive, and then we would spend days getting it refunded.

        Certain retailers don’t accept card payments if the transaction is less than a certain level. Can you turn off NFC/Apple Pay on this sort of basis?

        Currently we charge an amount for each transaction equivalent to the average amount charged to us, but as with all business we do, we’re competing on price and have the scope to discount premiums on things for each customer. If the credit charge makes the quote uncompetitive we may discount the premium to get the business. Strictly speaking the charge is still there, but from the client’s point of view you could argue we’ve waived it.
        Similarly, When we provide refunds on things where changes have been made we don’t get those original charges back, so there have been instances where it has cost us more in charges than we earned overall. These are few and far between, but there are instances where not knowing how a client is paying can be harmful. Cashback cards are a particular pain as we get charged more without even knowing.

        Personally, as a merchant I don’t want to hold customer card details, it’s just more administration that doesn’t benefit us, so I’m happy with Apple Pay from that point of view. It’s just interesting what level of control a merchant has.

    2. I would think yes. The token system generates a “one time use” account number, but that token still has to be authenticated by the vendor’s payment system. If it’s an AmEx and your business doesn’t accept AmEx, then it won’t go through. Just the same as if I swiped an AmEx card.

      As Predrag says, your agreement with AmEx probably does not permit you to deny it for smaller purchases and accept for larger ones. So if you *are* doing that, the system that your NFC reader is connected with would have to just be set up without AmEx, and you’d have to process permitted AmEx purchases through another system.

    3. Last Tuesday I only had my AMEX loaded into Pay. Went to Subway to try it out – the NFC terminal triggered the process, but the payment was declined. Tried again, same thing. The cashier asked which card I was using on my iPhone – when I told her AMEX, she said “we don’t take AMEX”. Paid for that sub with my PNC Debit card instead (pulled from wallet, waved it at the NFC terminal).

      I have since loaded two Visas into Pay, went to Subway this weekend, and it worked when I switched from my default AMEX to the Chase Visa.

      So, to answer your question – if you don’t take AMEX, your customer will have to chose a different card from Pay – if they have multiple cards loaded.

    1. Yet the way I am feeling about this travesty, the way many of us are reacting, I sort of wish Tim HAD literally blasted them, done something to materially hurt them. To run Apple Pay successfully for a few days at their stores, then shut it off? Crass. Insulting. I don’t care if they offer free CoverGirl or bring in Brad Pitt to play Santa Claus, I won’t set foot in their stores and I hope they are soon shuttered and their stock remaindered.

      1. Thank goddess you’re refraining from both vitriol and hyperbole! Otherwise those CVS/R-A heathens might really be burning at the stake or hung up on crosses! If we looked to Tim as a model we might aspire to his humane approach. I think his mood and words were, “sure, it’s a skirmish…” As if, no big deal, it’s all good, we’ll weather it. Jesus! What a lame, mellow, forgiving bastard!

  2. These stores should follow the example of Amazon and complain to the DOJ that Apple is involved in monopolistic practices. All this is a lot like the Amazon case against publishers. Apple had no right to “pull the rug out from under their feet”. Apple clearly talked to a lot of industry folks about this obviously coercive and therefore highly illegal maneuver. As the chains say, it is contrary to their customers’ best interests. DOJ: please put Judge Denise Coté on the case. And bring in another federal monitor, since Apple clearly does not get your point. /sarcasm

  3. Want to make stores notice your displeasure? If you have some time to kill go to the stores that are blocking Apple Pay, walk through the aisles collecting a cart of goods, go through the checkout procedure and go to pay with Apple Pay. If they respond that they do not accept it, politely state thats the only way you pay, thank you, and then walk out.

    Boycotts don’t work unless you hit critical numbers. Make the store managers have to void a sale and then have to reshelf everything gets noticed.

    Don’t do this unless the items are actually something you would buy at that moment if they actually did accept apple pay.

  4. Hang on I assume that Cook is only referring to the US here as contact less transactions here and in many other parts of the World are enormously popular and couldn’t possibly be overtaken so quickly by those with appropriate phones on ApplePay. As for the QR alternative as Cook rightly hints even US business can’t possibly succeed with a less easy to use, offbeat, localised dead end of a technology when the rest of the World is going in a very different direction, very quickly. Would have thought they would have learnt that from the telcos mistakes when smartphones took off.

  5. Thanks for the link. I posted this on CVS’ website.

    “So let me understand this. CVS and Rite Aid are intentionally shutting off Apple Pay (which I have already used and find easy and convenient) so that you can promote your own e-pay system, when Apple Pay doesn’t collect any customer data, but CurrentC does? I am not your product, and my shopping habits are none of your business. I have a CVS and Walgreen’s within two blocks of each other in my neighborhood. I wasn’t loyal to either, and shopped at both. Not any more. I will shop only at the retailer that uses Apple Pay and doesn’t want to use my payment as an opportunity to invade my privacy. What a dumb decision by senior management. You should emulate Apple and try to develop abiding loyalty in your customers, and not try to “monetize” them at every turn. If you focus on delivering great customer service, the customers will come. If you deny them choices and mine them for data, they will leave. I did.”

    1. They have their freakin’ rewards cards to collect customer information! They don’t need to collect even more info from the payments. This is just pure pigheaded greed on the retailers’ part.


  6. I find it very hard to believe that large retailers haven’t already ‘built in’ the 2-3% credit card transaction fees into their pricing structure. Their greed drives CurrentC, et al. If they were really being forthright, they would give everyone who uses a debit card a 2-3% off the retail price of their purchases. Talk about “having your cake and eating it too.”

    1. This is NOT about 2-3% credit card fees. They’ve been absorbing those for decades. This is about $300 per year per each active customer. That is the advertising value of our “active wallets” to these retailers. That is how much your personal data and shopping history is worth to their advertisers. With ApplePay, they get none of the data, so they can’t sell you to the advertisers.

      When you buy something at these stores where you regularly shop, with your receipt, you often get freshly printed discount coupons. Most often, these coupons will be for a competitor’s product for something you just bought (creepy, right?), or (even creepier) for a product that you often by there (but likely of a competitor’s brand).

      When you pay with ApplePay, you get no coupons (they can’t know if that is your one-time visit to the chain, or if you regularly shop). The feeling of being anonymous to these retailers is refreshing and liberating…

      1. You should still get coupons (on a paper receipt if you choose one), and they should still be able to track your purchases via rewards programs. They’ll just have to make their rewards program more attractive.

        Presumably their coming product will combine payment & reward program, like the Airlines do.

      2. What this really boils down to is consumer choice. I should have the choice of how to pay for my transactions and whom I share my personal information with. Those that choose not to accept apple pay have taken this choice away from me over their own interests. Its bad enough that they have all of my prescription information tied to my loyalty card and now that apple pay is here, I don’t have to share my credit card information with them any longer.

        So if you take my choice away, I can choose to take my business elsewhere. So the real question is, would they rather have me as a customer with apple pay or not have me as a customer? Hint to these greedy companies, one of those options generates revenue and profit and the other doesn’t!

      3. Retailers are not “absorbing” credit card fees, they pass them on in the form of higher prices (so cash buyers pay the fees too). The retailer can still get your data using a rewards program, which a vast majority already have in place. it’s just not automatic like a credit card or CurrentC would be.

    2. If you don’t think retailers build in the credit card transaction fees into their pricing, you’re incredibly naive. They factor in EVERYTHING (and they’re not paying 2%-3%, either, because they negotiate much lower rates due to a high volume of transactions).

      And it’s nothing about “being forthright”. Not very many people pay with cash any more, certainly not for large transactions. In fact, many stores offer you a discount if you use a debit card instead of cash or a credit card (Safeway grocery stores even do this for the fuel purchases).

      It’s not about “fair pricing”, it’s about getting customer data. The crazy thing is most of these companies have rewards programs which give you rewards in coupons if you spend $XX or straight discounts like a grocery store. They get your info anyway.

    1. Yep! And Walgreens is almost always “right around the corner” from CVS. That’s what so stupid about this. Switching stores isn’t the slightest inconvenience for me! Walgreens is right there!


  7. Interesting that so much of our economy and culture is made up of the businesses of doing business. In the old days it was advertising that paid for your television and radio, even though they almost felt like nationally-provided resources.

    Now, your internet access, your news, your sports, your schools, your politics – so much of it is run on advertising revenues. Its no surprise that there is push-back when someone comes up with an advert-independent and consumer-agnostic system. They are all desperate for your business. In their minds, that justifies finding ways to convince you to buy at their stores – through coupons, incentives, memberships, etc. They would argue that they are doing you a service, by marketing to you directly on your demonstrated interests and needs.

    Doesn’t make it feel less creepy or intrusive, though, when you realize how much they know and want to know about you.

    And they couldn’t have made a bigger mis-step when they decided to cancel existing services in the short-term to try to shore up support for their own, lesser, long-term solution that isn’t even available yet. They’re ruing it now.

  8. Emailed both to bring back Apple Pay as a customer choice the way it should be. I hope everyone will do the same and we bring there mail servers down to a crawl to let them know that Apple Pay should be a customers choice.

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