Guide to Mobile Payments in Canada for Business Owners
Did you know that a whooping 75 percent of major retailers accept contactless payments in Canada? Here in the States, it’s closer to 2 percent.
Because of this, we felt it was important to take a closer look at mobile payments in the Great White North with this handy guide.
Payment Systems: Canada vs. U.S.
When compared to each other, the U.S. and Canada are actually are not that far apart in terms of payment systems.
According to Jacqueline Chilton, Founding Partner, Muration Group, and Catherine Johnston, President & CEO ACT Canada, Canada spends $1,612, compared to $1,687 on debit and credit per capita $1,612. As for debit cards per capita Canada is at 0.7, with the U.S at 0.9. There are 2.3 to 2.9 credit cards per capita. Debit to credit transactions are 1.4 to 2.0. And, Canada has 297 bank branches per million inhabitants to 372 in the States.
As for mobile phones;
- 77% of all Canadians have a cell phone, compared to 90% in the U.S.
- 56% own a smartphone, with 58% of Americans having smartphone
- Only 21% use a tablet in Canada. 42% use a tablet in the States.
Finally, here’s how the two countries fare in relation to mobile payments.
In Canada, only 27 percent were familiar with shopping online with their mobile device. However, 87% of Canadians wish they could be wallet-free. And, the banks and retailers seem to have a strong commitment to NFC. In fact, there were roughly 250,000 contactless card readers out of 800,000 terminals.
While more than 34% of U.S. consumers have made a purchase using their smartphones, the U.S. still lags behind Canada in certain areas. For example, the U.S. was one of the last countries to implement EMV at retailers in October 2015 – Canada had been using EMV since 2013. Overall, the commitment to NFC technology from banks and retailers isn’t as strong as in Canada.
Canada is Quick to Embrace, But Mobile Payments Still Haven’t Caught On
David Robinson, Rogers Communications VP, proudly told the crowd at the 2014 Wavefront Wireless Summit in Vancouver that “Canada is the most ready country in the world for mobile payments to take root.” Robison added, “Ten percent of domestic transactions are contactless … and that’s going up about 1 percent a month.”
As mentioned in the introduction, Canada has arguably the biggest penetration of contactless-enabled POS systems in the world.
As Linda Mantia, Executive Vice President, Digital, Payments & Cards at RBC, explained to PYMNTS.com, “mobile commerce is the future.” She added, “Smartphones are always on us. We check we have them before we check what we have in our wallets. Our clients are no longer turning to their devices just for text, email, and voice – they’re turning to it for everything. We believe the key element to winning in the market and igniting mobile payments is choice.”
Mantia, went on to say that within the last two years, RBC has been the first to:
- Participate in Canada’s first mobile debit transaction with Interac and McDonald’s.
- Partnered with Facebook to launch the first social person-to-person (P2P) money transfer capability in North America.
- Became the first North American financial institution to develop an HCE payment solution. This allows Canadians to pay with most Android mobile phones.
Despite all of the this, mobile payments in Canada have not caught on.
Sunny Freeman states in the Toronto Star that this is because of the compatibility of mobile devices. “None of the Canadian-made mobile payment systems work on an iPhone. That automatically rules out about 40 per cent of smartphone users.”
Freemans, adds, “Next, only about 15 per cent of Canada’s 23 million smartphones are enabled with the Near Field Communication technology required to make mobile payments. That eliminates a lot more smartphone users because of their device.”
Another obstacle is that only two banks, RBC and Scotiabank, give customers the opportunity to pay through Interac on their phones.
There are also concerns that are not unique strictly to Canada. This include spreading awareness to customers, improving the current infrastructure, and ensuring that mobile payments are secure.
What Canada is Doing to Develop Mobile Payments
Canada is not idly standing by. The country is taking steps to help push along the development of mobile payments.
In August 2015, mobile payments were extended into the Code of Conduct for the Credit and Debit Card Industry in Canada. Christie Christelis, president of Canadian consultancy Technology Strategies International, stated, “It’s very early days for mobile payments at the point-of-sale in Canada, but the stakeholders such as the banks and telcos are establishing their positions.” He also said, There’s very little mobile payments adoption in Canada, as NFC-enabled smartphones aren’t available in sufficient quantities yet. Also, consumers lack awareness about NFC payments at the point-of-sale and need to learn how to load their card credentials onto smartphones.”
However, Christelis has also noticed enthusiasm and a growth in mobile payment usage. “Also, over the last year or two, I’ve been seeing a lot more contactless credit card payments in stores. Many Canadian POS terminals are already NFC-enabled on the back of the country’s EMV migration.”
The updated Code of Conduct “gives merchants the right to steer customers away from higher-cost payment cards for plastic card-based and mobile transactions.”
This gives merchants three options;
- Don’t accept contactless payments;
- Accept all networks’ contactless products;
- Accept a single network’s contactless products.
Retail Council of Canada said, “If mobile payments do become more expensive than other forms of contactless, you will be able to de-select mobile while maintaining in place all other provisions of your existing contract.”
On top of the Code of Conduct, the Canadian Bankers Association has “created both a Mobile Reference Model and a Payments Security White Paper to support the development and adoption of mobile payments in Canada.”
Released in 2015, the Payments Security White Paper was published by the banking industry. The paper shared the following principles;
- Security – Protect consumers and retailers that is equivalent to that provided by EMV chip and PIN.
- Openness – Create and support an open mobile payments environment that would allow consumers to purchase goods or services on any mobile device.
- Innovation – Support innovation in mobile payments.
As the Canadian Bankers Association concludes, “These principles are intended to encourage the introduction and adoption of new and innovative mobile payments products and services in Canada, without compromising the integrity of the Canadian payments infrastructure.”
Mobile Payment Options in Canada
As Christine Dobby notes in The Globe and Mail, “The current system is fragmented, with options that vary by bank, payment card, device and wireless carrier.”
Currently, here the mobile payment offerings from Canadian banks.
- BMO – Offers Mobile PayPass that works on any device, but only with MasterCard.
- CIBC – The CIBC Mobile Payment App works for Android and Blackberry devices, uses Visa and MasterCard, and works with the following carriers; Bell Mobility, Rogers, Telus, Virgin Mobile, Koodo.
- Desjardins – This payment app only uses Visa and compatible on Android or Blackberry devices. Works with the major carriers.
- PC Financial – Offers a loyalty, gift, and credit app called Ugo. It only uses MasterCard, works on Android or Blackberry, and is available on Rogers, Telus, Koodo.
- RBC – The RBC Wallet is a digital Visa or RBC card that works on all carriers and Android devices.
- Scotiabank – The Scotiabank My Mobile Wallet Visa credit or ScotiaCard is available on Android or Blackberry devices, carriers like Bell Mobility, Rogers, Telus, Virgin Mobile, Koodo
- TD – TD has an app and uses Ugo as well. Only works on Android or Blackberry devices and the following carriers, Bell Mobility, Rogers, Telus, Virgin Mobile, Koodo, MTS, SaskTel.
However, Canadians also have access to large issuing banks like American Express, Bank of America, Capital One, Chase, Citi, and Discover.
Mobile Wallet Alternatives
Besides the mobile wallets listed above, here are a handful of alternative mobile wallets that offered in Canada.
- Apple Pay – Apple finally launched its mobile wallet in Canada in the fall of 2015. The major difference with its U.S. counterpart is that it only works with American Express.
- Android Pay – Expected to arrive in Canada in early 2016.
- Blockchain.info – The popular bitcoin wallet can be used by mobile users in Canada.
- CurrentC – The U.S.-based mobile wallets uses QR code technology instead of scanning. It already beat Apple to the Canadian market.
- Ripple – The company announced that it was teaming up with RBC for a blockchain trial.
- Samsung Pay – This isn’t expected to arrive in Canada until sometime in 2016.
- SureTap – Rogers offers this virtual prepaid MasterCard. However, it also works with CIBC, TD, Desjardins, and Scotiabank.