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Jonathan Camhi
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3 Ways Ontario, Canada Is Leading the Charge in Mobile Payments

MasterCard ranked Canada as the second most prepared country in the world for widespread mobile payments adoption. Here are some of the reasons why.




Over the past week I participated in a tour of the fledgling mobile payments industry in Ontario, Canada. While the U.S. is bogged down on the path to mobile payments by complexity and fragmentation, Ontario has spent the last couple of years building a payments infrastructure that seems ready for the jump to mobile payments. We take a look at several factors that have helped Ontario take the lead in mobile payments readiness.


Canadians Are Getting Used to Tap-and-Go Payments

MasterCard and Visa led the way in introducing contactless NFC payments to Canada in the last couple of years, and the technology is already taking hold with merchants and consumers. MasterCard estimates that 11% of the point of sale card transactions that it processes are made with its PayPass NFC chip tap-and-go cards. PayPass is now accepted at 19 out of Canada's top 25 retailers, Will Giles, MasterCard Canada's SVP of emerging payments, says. And more than 30% of point of sale terminals in Canada are already NFC-equipped.

Ontario residents are also starting to get used to NFC card payments in their transit system. Presto, which provides fare cards for the region's various public transit systems, is also rolling out tap-and-go cards and terminals for transit users, Robert Hollis, Presto's EVP and interim CIO, said.

Now that Canadians are beginning to use tap-and-go payments with their cards, the rails and customer behaviors are being built to move to mobile NFC payments.




Interac Moving to NFC

Another reason why Canadians are learning to use tap-and-go payments is that Interac, Canada's nationwide debit network, is moving to NFC payments with its Interac Flash product. Canadians use debit far more than Americans do; about 56% of point of sale transactions in Canada are done with debit cards. Interac is owned by the five major banks that dominate the Canadian market and has rolled out NFC chip Interac Flash cards with four of those banks, according to Avinash Chidambaram, Interac's director of mobile.

Making the jump to mobile payments, Interac has already piloted mobile NFC chip payments with Interac Flash. The pilot, conducted earlier this spring with RBC and McDonald's, delivered promising results. "We found that a lot of people are comfortable using tap-and-go mobile payments for small transactions," remarked Chidambaram.


IT Talent Where It's Needed

Ontario is a hub for all of the industries that are needed to push mobile payments in Canada. All five of the major banks are headquartered in Ontario, as are two of the country's biggest telco providers. A number of major IT players like Intel, Microsoft and Oracle also have their Canadian research and development facilities or national headquarters in the region. And all of these companies have access to an impressive well of IT talent coming out of the universities in the region. Toronto and Waterloo, Ontario are home to several research and educational institutions that provide the talent needed for innovation in the mobile payments sector.

Along the tour I visited the Digital Media Zone at Ryerson University, a Toronto-based public research university. The Digital Media Zone is an incubator for graduates that aspire to be entrepreneurs, and several of the startups in incubation there are targeting mobile payments. One startup, called OnTab, allows merchants to accept various types of mobile payments, including NFC, QR codes, SMS and short codes, with a software upgrade, saving them the cost of a new terminal, said Behzad Malek, the company's founder.

"Over the last 6 months we're looking at financial services as a bigger focus. We see a lot of opportunities for disruption there," Valerie Fox, the Digital Media Zone's executive director, noted.

[To learn more about new opportunities in mobility in financial services, check out the agenda for the New Opportunities for Mobility: A Financial CIO/CTO Roundtablesession at the upcoming Interop event in NYC.]

 

Jonathan Camhi has been an associate editor with Bank Systems & Technology since 2012. He previously worked as a freelance journalist in New York City covering politics, health and immigration, and has a master's degree from the City University of New York's Graduate School ... View Full Bio

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Byurcan
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Byurcan,
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10/1/2013 | 12:44:27 PM
re: 3 Ways Ontario, Canada Is Leading the Charge in Mobile Payments
Yeah it definitely seems like Taxis are ahead of the MTA vending machines on payments technology, though wierdly Port Aurhority Bus Terminal machines accept Google Wallet, though I've never seen anyone use it!
Greg MacSweeney
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Greg MacSweeney,
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9/30/2013 | 6:56:36 PM
re: 3 Ways Ontario, Canada Is Leading the Charge in Mobile Payments
Interesting. I had a card with the tap and go technology a number of years ago, but only a few retailers offered the option to tap and pay. Then my card provider discontinued the tap and go option on the card, and i haven't used it since. It seems like all of the stars (card, retailer, consumer) have to be aligned for tap and go to work!
Jonathan_Camhi
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Jonathan_Camhi,
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9/30/2013 | 6:48:54 PM
re: 3 Ways Ontario, Canada Is Leading the Charge in Mobile Payments
I think in NYC it's really more of an issue of the cards. In Canada all of the new cards being issued by MasterCard and Visa have tap and go technology. That obviously isn't the case. And then once tap and go cards are issued, there will have to be a big educational effort on the part of issuers and card companies to spread awareness. All of that might not come until more tap and go terminals are out there, but we are starting to see them in the PATH and in yellow cabs. I wonder if tap and go terminals are starting to pop up anywhere in the States outside of NYC.
Jonathan_Camhi
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Jonathan_Camhi,
User Rank: Author
9/30/2013 | 5:58:42 PM
re: 3 Ways Ontario, Canada Is Leading the Charge in Mobile Payments
Interestingly in NYC its the taxis that are leading the way on tap and go. I hadn't noticed it before, but MasterCard told us in our meeting with them that they helped to install tap-and-go card terminals in all of the yellow cabs in the city. When I took the cab home from the airport the other night I inspected the card reader, and sure enough it had the tap and go symbol on it.
Greg MacSweeney
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Greg MacSweeney,
User Rank: Author
9/30/2013 | 4:00:30 PM
re: 3 Ways Ontario, Canada Is Leading the Charge in Mobile Payments
10 years? Wow. I can't see the MTA's swipe technology lasting another 10 years. And, yes, the PATH has tap and go.
Becca L
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Becca L,
User Rank: Author
9/30/2013 | 3:33:44 PM
re: 3 Ways Ontario, Canada Is Leading the Charge in Mobile Payments
I read the MTA is looking to phase out MTA cards within 10 years (+/-), it would be surprising if they weren't considering tap and go alternatives. (Does the PATH already have tap and go today?) I certainly agree that on the large MTA scale it would push our metropolis to quickly embrace tap technology.

Also interesting, given all the success in Canada I wonder if a few prominent "ahead of the curve" retailers like Starbucks will beta a system.

I expect that once it starts, it will roll out like an epidemic. Exciting times indeed...
Greg MacSweeney
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Greg MacSweeney,
User Rank: Author
9/29/2013 | 1:24:20 PM
re: 3 Ways Ontario, Canada Is Leading the Charge in Mobile Payments
"Tap and go" seems like a great way for payments. I wonder if the the NYC subway system, with its clunky "swipe (and swipe again) and go", may look to tap and go in the future. Getting a major metro system like the NYC MTA on 'tap and go' would do a lot to help consumers (at least in the NYC area) get comfortable with tap and go. Perhaps it will take something like this to get US consumers to adopt technology that our northern neighbors are enjoying.
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