Tag: canada smartphone payments

Canadians still prefer cash, but they are slowly starting to pick up their smartphones to make purchases.

According to the latest report from Technology Strategies International, a research firm, there is a very slow but upward growth of contactless mobile payments in Canada, to the degree that it will one day replace the current leader, cash.

The most recent report said that over half of Canadian smartphone owners had used their device for a transaction.

The report was called Canadian Payments Forecast – 2013 and it stated that over half of the smartphone owners in Canada had made a purchase at some point in which they used mobile payments to complete the transaction. Most of those were in the form of remote transactions, such as paying a bill through their bank’s smartphone app, or purchasing a product over the internet.

The use of mobile payments while in stores remains quite low despite the fact that remote transactions are common.

According to the Technology Strategies International president, Christie Christelis, “The incidence of in-store payments using mobile phones is very low.” Christelis went on to explain that “But with the increasing penetration of contactless payment acceptance terminals, coupled with the proliferation of NFC (near field communications)-enabled phones, we expect that by 2017 there will be almost 3 million regular mobile payment users in Canada.”

The report indicated that the primary mobile payments growth drivers within the marketplace in Canada include higher personal spending on products and services, as well as deeper electronic payments penetration of digital transactions into areas in which checks and cash had previously dominated.

Christelis explained that over the last two years, there has been a 20 percent increase in awareness of contactless mobile payments options that are available to consumers, adding that the familiarity with contactless cards as a transaction option is growing among Canadians, and those are being used more often. In that way, contactless transactions have already been making steps toward displacing the use of cash. It is expected by the report that this will become much more significant through the use of smartphones as well as cards, for the next five years.

Businesses in Canada seem interested in the technology but are wary of the costs that will be involved.

The wireless industry in Canada is strengthening the push that it has been making to accelerate the adoption of mobile payments, but merchants are feeling frustrated and pressured as they anticipate higher fees.

The Canadian Federation of Independent Business has said that businesses are preparing to be hit with costs.

The organization, which represents over 109,000 small businesses in the country, said that mobile payments are primed to develop into the “next big fee palooza” for credit card companies, banks, payment processors, and wireless carriers. It has expressed that there has been a “breakdown of trust” between those providers and small businesses.

Small businesses are just waiting to see what higher processing fees and other premiums come with mobile payments.

The CFIB said that the lack of trust from small business toward those companies already exists and is coming from the premium credit card transaction processes that already involve higher processing fees in order to accept them. Now the organization says those companies are waiting to see what mobile payments will have up its sleeves.

The CFIB has said that it is seeking an “express consent” requirement. This would mean that merchants would not have to accept transactions over smartphones and tablets just because they have signed up for the programs to accept contactless credit card transactions.

Canadians have already been using the Visa payWave and MasterCard PayPass contactless terminals in order to make small purchases. Those are the same devices that could be used to accept mobile payments through NFC technology and the CFIB is concerned that the industry will soon be implementing new fees with the use of those devices for accepting smartphone transactions. This would make it difficult for small businesses to remove that option later on if they already have the devices for the contactless card transactions.

On the other hand, banks and wireless providers have stated that they do not have any intention to implement new fees for mobile payments but are concerned that a provision for express consent would slow down merchant adoption of the transaction option.