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Mobile Payments: Strength In Numbers, Or Better To Go Solo?

In yet another sign of how fragmented the mobile payments environment is becoming, CVS Health has introduced its CVS Pay solution, which is integrated into the retailer’s mobile app. The barcode-based system is currently available in select markets in New York, New Jersey, Pennsylvania and Delaware, with a national rollout expected later in 2016.

CVS had been part of the retailer consortium MCX, which attempted to become a payments industry player beginning in 2014. But the group’s CurrentC app suffered from technical development slowdowns and failed to gain traction with consumers, resulting in MCX pulling the plug on the project in June 2016. Fellow MCX member Walmart had already gone its own way with an app-based payment system in December 2015. (The CVS Pay solution uses different technology than the CurrentC system.)

CVS Pay is designed to combine several steps in the transaction process. Customers who are picking up prescriptions can already use the app to order refills, manage multiple prescriptions and receive alerts when they are ready; now they can also pay using a single barcode. Shoppers can link their ExtraCare loyalty card with the payment solution, frictionlessly bundling deals and rewards points with payments.

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“Over the past year, our digital team has brought to market numerous new digital tools like CVS Pay that make shopping at CVS Pharmacy easier and more convenient,” said Brian Tilzer, Senior Vice President and Chief Digital Officer at CVS Health in a statement. “We’ve been excited by the level of customer adoption of these digital solutions.”

While closed systems such as those deployed by Starbucks, Walmart and now CVS are multiplying, there are also larger-scale and more broad-based mobile payment solutions emerging. Mastercard introduced its Masterpass solution in July 2016, which operates in stores, online and via consumer mobile devices, and is accepted at five million retail locations in 77 countries.

Visa also recently struck a deal with PayPal to make it easier for its cardholders to use the online payments system. It’s another indication that, with mobile payments expected to exceed $27 billion this year, the overall mobile payments “pie” is growing. For some companies, cooperation and a broad-based approach seems to be the most effective path. For others, such as CVS, a closed system that makes payment part of a unified bundle of services appears to be a healthier strategy.

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