Costco Wholesale (NASDAQ: COST) just changed the payment landscape in the United States. America’s favorite warehouse store will accept Google Pay, Apple Pay, and Samsung Pay at its registers.
“Costco members can now use Apple Pay, Google Wallet, and Samsung Pay at U.S. Costco locations,” a press release stated. Costco members will be able to pay with Visa and bank balances through those digital wallets.
Costco still refuses to accept MasterCard, American Express, and Discover Card payments in its stores. Costco had been testing near field communications (NFC) payments at a few of its stores before rollout, Business Insider reported. NFC wallets like Google Pay and Apple Pay use a wireless signal to communicate with registers.
Costco is not accepting Quick Read (QR) code solutions that use a phone’s camera to “read” a code on a screen. QR Code payment apps include Alipay, Walmart Pay, Chase Pay, WeChat Pay, and Google Taz.
Note: Costco was not among the brands listed as accepting Apple Pay at the wallet’s official website on 22 August 2018. Apple has been tight-lipped about new Apple Pay retailers for some time.
Costco Accepts Apple Pay and Google Pay
Costco stated it accepts Apple Pay, Google Wallet (Google Pay or Android Pay) and Samsung Pay at its website. Costco accepts no other NFC solutions – including PayPal (NASDAQ: PYPL).
Costco gas stations are not accepting NFC Payment, including Apple Pay. Therefore, you will still have to use your Visa Card at Costco’s pumps.
Canadians are out of luck. Costco Canada is not accepting any mobile payment solutions. Theoretically, Canadians should be able to use Apple Pay or Android Pay at US stores. Americans traveling in Canada will have to use their MasterCard, because Costco Canada will not accept Visa.
Mobile Pay Gaining Mainstream Acceptance
Costco’s move proves that mobile pay is gaining mainstream acceptance in the United States.
Costco is the largest American retailer to accept Apple Pay in some time. Most large retailers; including Walmart (NYSE: WMT), Kroger (NYSE: KR), Home Depot (NYSE: HD), Lowe’s (NYSE: LOW), and CVS Health (NYSE: CVS), have made no move to accept NFC payment. Walmart accepts QR payment solutions; but not NFC apps, in its stores.
The Business Insider speculated that Costco is trying to attract more tech-savvy millennial (persons under 35) shoppers. The more likely explanation is that Costco is trying to please the Millennials’ tech-savvy parents. The parents are the ones with the big salaries and house.
How Costco Can Encourage Other Retailers to Adopt Apple Pay
Costco’s adoption will encourage more retailers to accept mobile pay.
In particular, Costco can convince other retailers that NFC payment apps are secure. Walmart has refused to say why it will accept Apple Pay or Google Pay. A likely reason is fear of hackers.
An older hacker tactic uses the interception of wireless signals to steal financial information. Walmart and Kroger are probably afraid of hackers intercepting NFC signals.
The QR Code is theoretically more secure because it establishes a direct encrypted link to a retailer’s payment system through the internet. An advantage to QR code is that an outside payment solution receives no access to a retailer’s payment system. There is no signal for hackers to intercept.
How Secure is Apple Pay?
The lack of a major hack of Apple Pay, Samsung Pay, or Google Wallet probably convinced Costco those solutions are secure.
Retailers are afraid of lawsuits from consumers who lost financial numbers to hackers. Target (NYSE: TGT) paid $39 million to settle such a suit in 2015.
Retailers like Costco might abandon NFC payment if crooks crack Apple Pay. Given the volume of Apple Pay transactions; over one billion in 2nd Quarter 2018 Tim Cook bragged, it is only a matter of time before some criminal genius cracks its encryption.
The Hackers will Crack Apple Pay
There will be hell to pay when the Apple Pay hack occurs. A likely outcome will be a major crackdown on digital wallets by the Federal Reserve, the FDIC, and the US Treasury. The People’s Bank of China is already carrying out such a crackdown.
Investors and speculators need to watch for the Apple Pay hack because it will sink the Apple (NASDAQ: AAPL) stock price. Post hack will be a great time to buy cheap Apple stock.
A likely victim of the Apple Pay hack will be Tim Cook’s position as CEO. Cook is betting the company on Apple Pay’s security. Cook will be the logical scapegoat for the failure of Apple’s supposedly invulnerable security.
Kroger, Walmart, Target, and other retailers will face increased pressure to accept mobile payment. Only time will tell if they give into that pressure. Costco’s biggest competitor in the warehouse club business; Walmart’s Sam’s Club, refuses to accept NFC payment.