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Slowly but surely, the big merchants that make up the stalled Merchant Customer Exchange LLC retailer consortium are finding their own way in mobile payments.
The latest example is MCX stalwart CVS Health Corp., which in mid-August announced the launch of its CVS Pay mobile wallet.
The Woonsocket, R.I.-based chain of more than 9,600 pharmacies is piloting the payments app at an unannounced number of stores in four states to start with, and said a national rollout will come later this year. The quartet of states—Delaware, New Jersey, New York, and Pennsylvania—account for nearly 1,200 units in the chain, not counting CVS locations inside Target stores and so-called miniclinics.
As with Walmart Pay, which fellow MCX member Wal-Mart Stores Inc. launched nationwide earlier this summer, CVS Pay is part of a shopping app, which works with both Android and iOS devices. And, like Walmart Pay, it permits customers to load any major-brand credit or debit card. Health-savings and flexible-spending account cards are also eligible.
Users pay by showing a barcode on their device screen, which the clerk will scan. The user receives payment confirmation in the app once the sale has been rung up.
CVS Pay includes the chain’s ExtraCare loyalty program, which the company says has enrolled 70 million members. The new app will automatically add new deals and process eligible discounts.
An important feature for a pharmacy, experts say, is the app’s ability to automatically process and pay for prescriptions while allowing the user to keep authenticating information like birth dates private.
That’s a key distinction from apps like Walmart Pay, say observers. “The difference between CVS Pay and Walmart Pay is the customer value proposition,” says Thad Peterson, a senior analyst at researcher Aite Group, in an email message. “CVS Pay integrates their powerful loyalty program and pharmacy processes into the payment platform, which reduces friction and adds value for the customer. Since Wal-Mart generally limits promotion and has no loyalty program, there’s not a lot of incentive for the customer to use their payment function.”
The new wallet is a product of CVS’s digital innovation lab, which it set up in June 2015. Until recently, CVS relied on a mobile wallet developed by MCX, a consortium of 40 major retail brands formed in 2012 to create a merchant-controlled wallet that could rein in acceptance costs by eschewing major-brand cards.
Indeed, at the 2014 launch of Apple Pay, which allows users to load network-branded credit and debit cards, CVS and other merchants stirred controversy by allegedly shutting off near-field communication readers in their stores to stop the NFC-dependent wallet from being used.
MCX announced this spring it was closing a pilot in Columbus, Ohio, for its CurrentC app. The consortium had earlier said it had no immediate plans for a rollout.
Now that it has created its own mobile wallet, CVS is in the same position as other individual merchants launching or investigating such products. “Retailers are being strongly affected by trends in digital commerce, and they need to have digital strategies of their own,” says Rick Oglesby, principal at consultancy AZPayments Group.
For now, Peterson says the pharmacy is on the right track with its emphasis on loyalty and privacy. “Value to the customer is going to be the driver for adoption of mobile wallets going forward,” he notes.
—John Stewart
