Canada slow to take-up mobile banking
A white paper by Canada's six largest banks in conjunction with the Canadian Bankers Association has shown that fewer than 25% of their customers can use mobile payments, indicating the country's slow take-up of the new technology; contactless payments represent between just 10% and 20% of total transactions in Canada. However, Apple Pay is yet to launch in the country, and there are suggestions that this could speed up the adoption of the service.
Apple Pay, Apple’s mobile payments service for the iPhone, launched in the United States in 2014 and is expected to start being used in the United Kingdom on Tuesday. Some observers expect the service will come to Canada later this year. Share

The technology allowing consumers to make purchases using credit and debit cards stored on their smartphones is rolling out in Canada, but fewer than 25 per cent of consumers can use it, according to a white paper released by the six largest banks in conjunction with the Canadian Bankers Association.

Mobile payments, where consumers make small purchases by holding their phones near compatible point-of-sale merchant terminals, have become a key area of development among financial institutions eager to satisfy what they believe is a strong consumer demand.

They also want to position themselves as technologically forward.

Some banks have seen the development of their own payments technology as a necessary defence against the likelihood that large tech companies, such as Apple Inc. and Google Inc., will position themselves as alternative financial players in the eyes of consumers.

Apple Pay, Apple Inc.'s mobile payments service for the iPhone, launched in the United States in 2014 and is expected to start being used in the United Kingdom on Tuesday. Some observers expect the service will come to Canada later this year.

Despite the rising competitive environment, though, the Payments Security White Paper noted that the mobile payments industry is faced with a low acceptance rate by consumers: To date, contactless payments represent between 10 and 20 per cent of total transactions in Canada.

"Because mobile payment capability is available to a small subset of the consumer population, it is challenging for issuers to communicate and promote mobile payments broadly and awareness of mobile payment remains low," the white paper said.

These are early days, of course. Smart phones must be able to handle near-field communication, allowing the mobile devices to make contactless payments of up to $100. Similarly, credit and debt cards must support the new technology, leaving many consumers shut out.

The roll-out among stores is also limited. Although 80 per cent of merchants in targeted categories, such as pharmacies and grocery stores, support mobile payments, just 30 per cent of overall point-of-sale devices support them. "To truly drive the adoption of mobile payments, the customer experience with the mobile device would need to be as good as, or better than the experience with the payment card," the white paper said. Ideally, consumers should be able to load any of their cards onto their phones and pay for any transaction of any value, anywhere.

"Until the mobile device provides the same or more functionality as the payment card, adoption of mobile payments may continue to increase slowly," according to the white paper.

Apple, Google Inc. and Samsung Electronics Co. Ltd. are expected to solve some of these issues because of their popularity among consumers and a marketing heft that transcends financial institutions, which is why many traditional banks look at the tech companies as potential threats.

"These players will likely leverage new technologies, introduce new business models and deliver compelling customer experiences," the white paper said. "These solutions will provide options for Canadian consumers."

On the eve of Apple Pay's arrival in the U.K., reports are already suggesting that the service could ignite mobile payments in that country, where just 5 per cent of consumers currently use mobile payments each week.