Mobile payment adoption gaining momentum

Mobile payment adoption is gaining momentum. Usage in Canada is setting example for the global markets.

Last week – during a media tour — global credit card major MasterCard Canada’s Senior Vice President Will Giles explained how mobile payment adoption is set to revolutionize the payment industry.

Latest mobile payment adoption statistics is not available. But mobile payment adoption in Ontario, Canada, is growing. Several retail chains like Starbucks and departmental malls are taking mobile payments. he said.

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At a Starbucks shop in a well known mall in Toronto, MasterCard’s Giles showcased how the transaction happens on the smartphone after buying a cup of coffee. It’s easy and secure.

MasterCard has indicated that 1 in 10 MasterCard payments in Canada are made using PayPass, its NFC-enabled payment. 19 of the top 25 Canadian merchants by volume accept contactless payment.

Canada becoming hub of mobile payments

From Ontario’s perspective, Near Field Communications (NFC) will be a key enabling technology for mobile payments.

“The timing of the rollout of EMV (chip and PIN) technologies in Canada has facilitated the rapid penetration of NFC–enabled merchant terminals,” said David Wai, Senior Sector Advisor at Ontario Ministry of Economic Development, Trade and Employment.

Mobile phones are more common than banking relationships.

“There are several customer benefits. Mobile handsets add new payment capabilities and convenience. NFC leverages current payment infrastructures,” said mobile payment firm EnStream COO Almis Ledas.

EnStream can offer access to over 95 percent of the carrier owned secure elements in Canada. EnStream’s business partners are Blackberry and Bell ID for operations and technology. EnStream provides service provider / credential issuers with a central point to connect to secure element owners.

At present, EnStream follows three business models: First, shared SEM services for MNO’s. Second, it offers aggregated resale of MNO secure element access and third, shared, pre-connected, SP TSM access for credential issuers.

Toronto is North America’s third largest ICT hub (after New York and San Francisco) – it is home to more than 13,000 companies providing software, hardware and communications services, and financial services companies are among their biggest clients.

“The city is also a hotbed for app developers – Canadians are producing about 70,000 new apps every month – and consumers here have a strong appetite for apps,” said Janet Ecker, President and CEO, Toronto Financial Services Alliance (TFSA).

mobile payment ecosytem

Mobile payment growth drivers

The Canadian population is nearing the tipping point of becoming a Smartphone majority. 47 percent of Canadians now report using a Smartphone, a significant increase over 2012, when 34 percent of Canadians reported using such a device.

Around 3.4 million Canadians used their mobile phones to pay for goods or services in 2011.

Mobile and social media are changing the way consumers shop. Integrated shoppers expect a seamless shopping experience across all touch points: online, in-store, mobile.

“They are looking for fast, convenient and secure payment options. This demand for shopping convenience is driving a shift to digital payments,” said Moneris Chief Sales & Marketing Officer Jeff Guthrie.

Opportunities for mobile adoption:

– Payments market continues to see rise in debit and credit payments (versus cash)

– Consumers are becoming more comfortable with mobile banking; see mobile payments as being youth-driven

– Continued increase in EMV/Chip and PIN card adoption

– Code of Conduct update to include mobile payments probable

– Mobile networks increasingly taking on role of acquirers

– Biometric authentication on the rise, globally (voice and fingerprint


– Increased innovation, integration and digitization

Innovation key for mobile payment growth

Innovation and collaboration are vital aspects for the growth of mobile payment growth. Telecom sector plays an important role.

Rogers Communications VP David Robinson says 3G and 4G access is improving the mobile payment adoption. Rogers Communications is the #1 telecom service provider in Canada, ahead of Telus and Bell.

Is mobile payment safe? Will consumers be ready to exposure their card for small payments as well?

SecureKey VP Products Stu Vaeth says mobile payments are safe since these are encrypted.

Online fraud and identity theft are increasing – Over $20 billion annually in online shopping fraud alone, excluding costs of Identity Theft, Bank Fraud, Insurance Fraud, etc.

SecureKey offers Connect, a multi-factor authentication service for the enterprise – enabling user-centric BYOD authentication. It supports NFC and non-NFC devices, hardware and software SEs, reads existing consumer chip card credentials and provides credential federation among groups within the enterprise.

Canada is not the only country to gain from mobile payment revolution. Coffee chain Starbucks revealed during its Q3 2013 earnings that mobile payments now account for 10 percent of its total in-store U.S. sales.

Presto Executive Vice President Rob Hollis said Canada will be on the top of mobile payment innovation. Next round of investments in infrastructure projects will have better adoption of mobile payment systems.

Everlink Vice President of Product Management & Marketing David Hooper said the product innovation is the key for addressing market demands.

According to research firm IDC, by 2017, 1.5 billion smartphones will be in use globally.

By the end of 2017, Forrester Research predicts that U.S. mobile users will spend $90 billion via mobile payments, a 48 percent increase over the $12.8 billion spent in 2012.

The percentage of NFC-enabled POS terminals stands at 31 percent in Canada, Japan 27, US 16, UK 16, France 8 and Turkey 4. But the mobile payment growth is slow at present. Smartphone adoption and removal of local regulatory issues will trigger wider adoption.

Baburajan K reporting from Toronto
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