Canadians and their mobile phones are by and
large inseparable, providing what Visa Canada and MasterCard Canada
see as an opportunity for mobile phones equipped with near-field
communication (NFC) to become mobile wallets; replacing plastic
cards and cash, particularly for small-value purchases.
large inseparable, providing what Visa Canada and MasterCard Canada
see as an opportunity for mobile phones equipped with near-field
communication (NFC) to become mobile wallets; replacing plastic
cards and cash, particularly for small-value purchases.
Will Giles, MasterCard Canada’s vice-president,
acceptance, told EPI the ability to make payments by waving a NFC
phone at a contactless card reader might particularly appeal to
younger consumers.
acceptance, told EPI the ability to make payments by waving a NFC
phone at a contactless card reader might particularly appeal to
younger consumers.
“The fact consumers are increasingly using
their cell phones for more than just calls, for example music
downloads and photos, is an encouraging sign for m-payments,” added
Zack Fuerstenberg, Visa Canada’s director of new channels.
their cell phones for more than just calls, for example music
downloads and photos, is an encouraging sign for m-payments,” added
Zack Fuerstenberg, Visa Canada’s director of new channels.
However, m-commerce has had a bumpy ride in
Canada since national banks first became interested in wireless
technology around 2000. This makes it hard to predict how readily
consumers and banks will adopt NFC.
Canada since national banks first became interested in wireless
technology around 2000. This makes it hard to predict how readily
consumers and banks will adopt NFC.
American Express Canada, Bank of Montreal
(BMO), CIBC, TD Canada Trust and Scotiabank, have yet to make any
announcements about NFC. As of October 2008, only Royal Bank of
Canada (RBC) and Citibank Canada are involved in NFC trials.
(BMO), CIBC, TD Canada Trust and Scotiabank, have yet to make any
announcements about NFC. As of October 2008, only Royal Bank of
Canada (RBC) and Citibank Canada are involved in NFC trials.
“We are working on NFC, but there is nothing to
announce now,” said TD spokeswoman Kelly Hechler.
announce now,” said TD spokeswoman Kelly Hechler.
In similar vein, BMO spokesman Ralph Marranca
said: “NFC is something we are investigating, but we are not
currently involved in trials.”
said: “NFC is something we are investigating, but we are not
currently involved in trials.”
At the moment, Canadian banks’ focus is
ensuring that migration to EMV goes smoothly. An EMV trial is
taking place in Kitchener-Waterloo, Ontario, with financial
institutions aiming to have migrated the majority of Canada’s
cards, ATMs and POS terminals to EMV by 2012. Concurrently, many
issuers plan to offer a contactless capability on their
EMVcards.
ensuring that migration to EMV goes smoothly. An EMV trial is
taking place in Kitchener-Waterloo, Ontario, with financial
institutions aiming to have migrated the majority of Canada’s
cards, ATMs and POS terminals to EMV by 2012. Concurrently, many
issuers plan to offer a contactless capability on their
EMVcards.
Issuance of Visa PayWave and MasterCard PayPass
contactless cards and readers is a necessary first step before
merchants can accept NFC payments. Eight out of the 12 Canadian
MasterCard credit card issuers have already started issuing PayPass
cards and 20 nationwide retailers have deployed PayPass readers,
Giles said.
contactless cards and readers is a necessary first step before
merchants can accept NFC payments. Eight out of the 12 Canadian
MasterCard credit card issuers have already started issuing PayPass
cards and 20 nationwide retailers have deployed PayPass readers,
Giles said.
There is a lack of PayWave readers in Canada,
although Visa will start rolling them out in the next few months.
So far, only TD is testing PayWave readers and contactless cards,
in a small pilot in Ontario. RBC also plans to start testing
contactless cards. Both RBC and TD intend to issue PayWave cards,
said Fuerstenberg.
although Visa will start rolling them out in the next few months.
So far, only TD is testing PayWave readers and contactless cards,
in a small pilot in Ontario. RBC also plans to start testing
contactless cards. Both RBC and TD intend to issue PayWave cards,
said Fuerstenberg.
M-banking
Go deeper with GlobalData
The first Canadian mobile banking services were launched in the
early part of this decade.
“Canadian banks were very excited about
m-commerce in 2000,” said TowerGroup analyst Virginia Garcia. “But
the market was not ready; handsets were inadequate, and mobile
browser and text messaging speeds were too slow. Now the market is
much readier for m-commerce, handsets are better and network speeds
are faster.”
m-commerce in 2000,” said TowerGroup analyst Virginia Garcia. “But
the market was not ready; handsets were inadequate, and mobile
browser and text messaging speeds were too slow. Now the market is
much readier for m-commerce, handsets are better and network speeds
are faster.”
Currently, among Canada’s top banks, only RBC
and TD offer mobile banking services. These enable customers to
transfer funds between accounts, pay bills, and check
balances.
and TD offer mobile banking services. These enable customers to
transfer funds between accounts, pay bills, and check
balances.
“A large number of RBC customers use
m-banking,” said RBC head of payments innovation Anne Koski.
“M-banking is an extension, not a replacement, for our other
channels. For example, it lets people pay bills on the bus.”
m-banking,” said RBC head of payments innovation Anne Koski.
“M-banking is an extension, not a replacement, for our other
channels. For example, it lets people pay bills on the bus.”
RBC is involved in three m-commerce projects.
It is lab-testing NFC phone payments in a trial with Visa Canada,
which will shortly move to an RBC staff trial in Toronto, followed
by a consumer pilot, explained Fuerstenberg.
It is lab-testing NFC phone payments in a trial with Visa Canada,
which will shortly move to an RBC staff trial in Toronto, followed
by a consumer pilot, explained Fuerstenberg.
With Vancouver credit union Vancity and TD, RBC
is trialling a service which sends Visa card transaction alerts to
participants’ cell phones.
is trialling a service which sends Visa card transaction alerts to
participants’ cell phones.
“Mobile alerts help to build the connection in
consumers’ minds between mobile phones and their Visa cards,” said
Richard Robins, director, marketing and business development at
Vancity’s Visa card division. “In the future, we will have NFC
transactions with cell phones.”
consumers’ minds between mobile phones and their Visa cards,” said
Richard Robins, director, marketing and business development at
Vancity’s Visa card division. “In the future, we will have NFC
transactions with cell phones.”
In September 2008, RBC launched a trial of
Mobex, a cellphone-based person-to-person payment service. Users
load their Mobex account using a credit card or a transfer from
their bank account at the Mobex website.
Mobex, a cellphone-based person-to-person payment service. Users
load their Mobex account using a credit card or a transfer from
their bank account at the Mobex website.
To pay someone, they send a text message to
Mobex with the amount and the recipient’s mobile phone number.
Funds are then taken from the sender’s Mobex account and moved to
the recipient’s Mobex account.
Mobex with the amount and the recipient’s mobile phone number.
Funds are then taken from the sender’s Mobex account and moved to
the recipient’s Mobex account.
Mobex can only be used for low-value
transactions, as the maximum that can be transferred a month to the
user’s Mobex account is C$500 ($433).
transactions, as the maximum that can be transferred a month to the
user’s Mobex account is C$500 ($433).
“It is meant to replace cash or cheques for
paying friends or babysitters,” Koski said.
paying friends or babysitters,” Koski said.
The pilot, which ends in January 2009, is
limited to RBC staff and their family and friends.
limited to RBC staff and their family and friends.
“You do not have to be a RBC client to use
Mobex, and you can use any Canadian cellphone,” Koski added. “We
have seen RBC staff adopting Mobex in droves. The effect is viral,
as they get friends to sign up.”
Mobex, and you can use any Canadian cellphone,” Koski added. “We
have seen RBC staff adopting Mobex in droves. The effect is viral,
as they get friends to sign up.”
First Annapolis Consulting analyst Brent
Samuels explained that Mobex could help consumers become aware they
can use their mobile phones for payments.
Samuels explained that Mobex could help consumers become aware they
can use their mobile phones for payments.
“But people might be deterred from using Mobex
because of the friction involved in setting up the Mobex account
and moving money in and out,” Samuels added.
because of the friction involved in setting up the Mobex account
and moving money in and out,” Samuels added.
Mobile carriers
Apart from merchants, mobile carriers are essential for NFC to
become a reality. The carriers provide the over-the-air activation
facility enabling subscribers to download their payment cards to
their handsets.
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By GlobalDataIn 2005, Canada’s three main carriers, Bell
Mobility, Rogers Wireless and Telus Mobility, launched a joint
m-payments initiative. They initially wanted to develop remote
m-payment services using short message service (SMS) texting but
have refocused on NFC.
Mobility, Rogers Wireless and Telus Mobility, launched a joint
m-payments initiative. They initially wanted to develop remote
m-payment services using short message service (SMS) texting but
have refocused on NFC.
Bell is participating in MasterCard’s Canadian
NFC trial with Citibank Canada and Citi credit cardholders, while
Rogers is involved in the GSM Association’s Pay-Buy-Mobile global
NFC initiative. An informed source told EPI that Rogers is
currently talking to a Canadian bank about an NFC trial.
NFC trial with Citibank Canada and Citi credit cardholders, while
Rogers is involved in the GSM Association’s Pay-Buy-Mobile global
NFC initiative. An informed source told EPI that Rogers is
currently talking to a Canadian bank about an NFC trial.
Unlike NFC, where a credit card is stored on
the phone’s SIM (subscriber identity module) card, the SMS model
involves linking credit cards or bank accounts remotely via text
messaging to cell phones.
the phone’s SIM (subscriber identity module) card, the SMS model
involves linking credit cards or bank accounts remotely via text
messaging to cell phones.
Celent analyst Red Gillen stressed that the
high cost of text messaging in Canada acts as a deterrent to
SMS-based m-payments and also m-banking.
high cost of text messaging in Canada acts as a deterrent to
SMS-based m-payments and also m-banking.
“The SMS model is too cumbersome for use at the
point-of-sale,” said Aite Group analyst Nick Holland. “It relies on
contacting a remote third party that relays the transaction
information to the merchant. This risks introducing delays.”
point-of-sale,” said Aite Group analyst Nick Holland. “It relies on
contacting a remote third party that relays the transaction
information to the merchant. This risks introducing delays.”
However, he added there are sectors such as
card parking where SMS payments can work because there is not the
same time pressure as at retail checkouts.
card parking where SMS payments can work because there is not the
same time pressure as at retail checkouts.
Vancouver-based Verrus operates an SMS service
that allows consumers to pay for parking in major Canadian cities
from their mobile phones.
that allows consumers to pay for parking in major Canadian cities
from their mobile phones.
Neil Podmore, Verrus vice-president of
international business development, said that mid-week Verrus
processes around 4,000 parking payments a day in Vancouver.
international business development, said that mid-week Verrus
processes around 4,000 parking payments a day in Vancouver.
“Drivers can register with Verrus at the
curbside, either calling our IVR [interactive voice response] system or using SMS to give us their credit card number and licence
plate number,” he said. “Around 8,000 parking meters in Vancouver
use our system, and we operate in Winnipeg, Regina, Edmonton and
Calgary.”
curbside, either calling our IVR [interactive voice response] system or using SMS to give us their credit card number and licence
plate number,” he said. “Around 8,000 parking meters in Vancouver
use our system, and we operate in Winnipeg, Regina, Edmonton and
Calgary.”
Verrus is trialling the use of its system for
taxi payments in three Canadian cities, Barrie, Sault Ste Marie,
and Grande Prairie.
taxi payments in three Canadian cities, Barrie, Sault Ste Marie,
and Grande Prairie.
“You register for the taxi payment system in
the cab, entering your card number and the taxi number on your
handset,” Podmore said. “You do not hand over your card to the
driver, and he does not need a card reader, just a
cellphone.”
the cab, entering your card number and the taxi number on your
handset,” Podmore said. “You do not hand over your card to the
driver, and he does not need a card reader, just a
cellphone.”
Encouraging results
“MasterCard Canada is very encouraged by the results of its NFC
pilot so far, and plans to expand its NFC activities in the next
year or so,” Giles said.
“When our issuers feel the time is right to
roll out NFC, we will work with them on this, using the PayPass
infrastructure in place.”
roll out NFC, we will work with them on this, using the PayPass
infrastructure in place.”
“Our tests have shown that NFC works,” said
Koski. “Now we need to find out if consumers want to use NFC, as
this would be a change in their payments behaviour. Will they be
willing to activate the NFC application on their phone and download
their cards, or is this too much hassle?”
Koski. “Now we need to find out if consumers want to use NFC, as
this would be a change in their payments behaviour. Will they be
willing to activate the NFC application on their phone and download
their cards, or is this too much hassle?”
“Activating an NFC phone’s m-wallet takes 90
seconds, and people often do this when they first get the phone and
are activating the voice capability,” said Mohammad Khan, president
of US contactless payments specialist VivoTech.
seconds, and people often do this when they first get the phone and
are activating the voice capability,” said Mohammad Khan, president
of US contactless payments specialist VivoTech.
“In the 25 NFC trials worldwide we have been
involved in, we have seen that consumers really like NFC.”
involved in, we have seen that consumers really like NFC.”
