TORONTO May 15 Mobile payments in Canada moved
a step closer to reality on Tuesday as a major bank and the
country's largest wireless carrier teamed up to launch a "mobile
wallet" that puts credit card credentials onto smartphones.
Rogers Communications and Canadian Imperial Bank
of Commerce said at a joint news conference the mobile
wallets will be available later this year and will be the first
"It will no doubt change the way Canadians pay for
purchases," said David Williamson, CIBC's head of retail
Rogers had 9.3 million wireless customers at the end of
March, and CIBC is Canada's fifth-largest bank. Rogers is paying
the bank a flat fee per credential added to its SIM cards.
Canada's banking industry on Monday published a blueprint to
support open standards for secure transactions using near field
communications (NFC) chips that are available in a growing
number of the latest smartphones.
That guidelines, a joint effort by Canada's banks and credit
unions, followed a government-sanctioned report late last year
that warned Canada was falling behind in the global push for
secure mobile payments.
"Today we've taken a giant leap forward," said Rob Bruce,
president of communications for Rogers.
He said 60 percent of Rogers' postpaid customers use a
smartphone and that some 300,000 of those are already
NFC-enabled. "In a few years, a digital wallet will be just as
common on a smartphone as a camera is today," Bruce said.
The NFC chips can hold secure data and exchange it
wirelessly across very short distances, meaning they can
communicate with the sophisticated electronic readers already
broadly adopted by Canadian retailers.
The readers, most of them in fast food outlets, gasoline
stations, grocery and convenience stores and coffee shops, work
with existing credit and debit cards that emit similar signals.
NFC chips are considered a safer alternative to traditional
magnetic strips, which are more easily hacked.
The global value of mobile payment transactions is difficult
to quantify, given that research firms have defined the market
in different ways, but they all agree that the sector is set to
Globally, NFC-based mobile payments are expected to exceed
$13 billion by 2013, according to research firm Gartner, rising
from just over $7 billion in 2011. But NFC is still dwarfed by
mobile payments made via SMS or online, which together accounted
for transactions worth more than $90 billion in 2011, Gartner
The Rogers-CIBC announcement is likely to be the first of
several as Canada's banks and telecom companies jostle for
advantage in the nascent mobile payments market.
The country's third-largest wireless operator, Telus Corp
, said it is working with a number of banks to offer a
mobile wallet to its customers in the near future.
"Due to the sensitive nature of the credentials being stored
on devices, Telus is spending time to ensure that we offer a
superior security and service experience when we launch,"
spokesman Jim Johannsson said.
The carriers, and to a lesser extent the banks, are
threatened by a rival mobile payment system from Google Inc
, which plans to bring its Google Wallet to Canada.
Currently offered via Nexus S phones on Sprint Nextel Corp's
U.S. network, Google Wallet cuts the carrier out of the
equation and does not charge merchants or the credit providers
either a fee or a cut on purchases. Instead Google uses the
system to collect transaction data for targeting ads to the
individual consumer, a red flag for the banks.
In the United States, three big carriers have struck deals
with three banks for the Isis payments venture and launched
pilots in two small markets. But the partners still must
persuade millions of merchants to upgrade their payment readers
to enable them to work with smartphones, something the Canadian
banks and carriers don't need to worry about.