By UTSAV UPTA
The idea of loading money onto smartphones and then paying at the payment terminal with a tap seems amazing right?
But, Canadians have always suffered trying to get this system going.
The Canadian mobile payments system is a huge mess. It began with Google Wallet, which never made it outside the United States.
In the race to implement mobile payments in the market, Google Wallet’s unavailability in the Canadian market forced Canadian Imperial Bank of Commerce (CIBC) to launch its own mobile payment system in late 2012, letting customers pay at the terminal with their BlackBerrys.
Two years before Apple Pay launched, CIBC’s move forced other banks and major carriers like Bell and Rogers to jump on the bandwagon.
Since then, the tangled mess snowballed and today, it’s huge.
Toronto Dominion Bank (TD), Scotia Bank, Royal Bank of Canada and Bank of Montreal launched their own mobile banking apps to support the new system.
However, the experience is full of limitations. For it to work, the user must obtain new Near-Field Communication (NFC) equipped SIM cards along with new smartphones, which support the technology.
In addition, the banks’ partnerships with carriers require a dedicated combination to work. For example: a Scotia Bank user must be a Rogers customer with its new NFC SIM card. If the user is affiliated with any other carrier, the system won’t work.
This mess can be solved with a unified service that can load all cards onto a single smartphone without needing a specific carrier. Apparently, it only needs an Internet connection and an NFC chip, which already comes embedded in newer smartphones.
Enter Apple Pay. Apple partners with all the banks to allow their cards to load on the iPhone, which already has an Internet connection and an NFC chip.
As the card is loaded, the user will present their smartphone on the tap terminal instead of a card and the payment will take place wirelessly.
Apple Pay has been in the market for more than a year. However, just like Google Wallet, it is unavailable in the Canadian market.
There were rumours in February that Apple would launch Apple Pay here in September along with the new iPhones. However, it didn’t happen.
It is here now, partially. American Express cards, issued directly by American Express, are allowed.
Cards issued by banks along with MasterCard and VISA are not.
Samsung, being a major player in the smartphone industry, also launched its mobile payment system, named Samsung Pay, in August this year. But, the company only promised that it would “eventually arrive in Canada,” giving no specific date.
Google Wallet paved way for a new service called Android Pay as Google’s mobile payment system but the story of unavailability continues.
The collective failure of all the entities to launch their systems in Canada can be blamed on the banks and the carriers. They are fighting for it to not launch, as it would alienate their own mobile payment platforms.
Also, Apple and other companies charge somewhere about 0.15 per cent of the transaction amount to the issuer of the cards, like CIBC.
If it ever makes its way to Canada, the banks will have to distribute a small part of their profits to these companies as a transaction handle charge.
We’re also aware of the fact that Rogers, Bell and Telus are the big three of the Canadian carriers and how they hold the market monopoly. They want to improve their own payment systems and not pay a penny to these companies.
The user experience of the current batch of applications by all the banks is horrible to work with. You need a different application on your smartphone for every bank at which you have an account.
For that matter, Rogers even launched an application named Suretap Wallet but it doesn’t overcome the problem of the tangled mess.
Right now, Suretap only supports credit VISA cards issued by the CIBC.
Another application named UGO Wallet is available in the market, but only the TD bank cards are allowed, with an exception of some of the President’s Choice credit cards, which need a Rogers connection to work.
To untangle this mess, the banks and carriers could have unified to bring a single mobile payment application and led the way globally in implementing contactless payments.
The infrastructure for the payment terminals is already there from the past couple of years. Most retailers have already installed the new terminals supporting the technology.
But, frankly, the banks’ strategies were not thought out correctly.
They took a different approach, and issued cards with chip-and-pin technology, which also has an NFC chip embedded.
But, it doesn’t solve the problem completely. The user still has to have the card in their physical wallet.
So, Canada still lags behind the U.S. in terms of mobile payments even though it has had the infrastructure long before the U.S. did.
It is time that carriers and banks realise their mistake and get back on track with a unified system or let other services, like Apple Pay, do the job.
After all, Canada doesn’t have to lag behind in the technology department every time right?