RBC Royal Bank and Visa have joined forces to pilot Canada’s
first contactless payments trial using mobile phones equipped with
near field communication technology. The trial is another in a
series of new mobile device-based payments initiatives in Canada.
Charles Davis reports.
Card-loving Canadians might soon be tempted to use their mobile
phones to make payments if an upcoming test of contactless payments
by RBC Royal Bank and Visa Canada proves successful. RBC and Visa
will pilot a mobile payment service that uses mobile phones rather
than traditional credit cards for making Visa purchases. This
Ontario-based pilot is expected to be completed in 2008, and
involves multiple phases including in-lab testing, an RBC staff
pilot and a consumer trial, Andrew Ross, senior manager, credit
payments at RBC, told Electronic Payments International, a
sister publication to RBI.
Go deeper with GlobalData
Mobile devices equipped with near field communication (NFC) chips
will enable users to make purchases using the Visa payWave feature
just as they would with a contactless payment card. The functions
to be tested in the pilot include secure delivery and storage of
account information to the mobile device, mobile payments at
retailers, storing and redeeming mobile payment coupons, and mobile
account management.
Early days for contactless
Contactless payments are in their infancy in Canada. Ross said
competing specifications and services, technology and hardware have
made it difficult to determine requirements.
“Most new technology is the same – nobody wants to build for Beta
if VHS is going to be the eventual winner,” Ross said, referring to
huge confusion caused in the 1970s by rivalry between two video
cassette recording systems, Betamax and VHS. “Clarity is only now
starting to surface, with the emergence of some dominant
architectures which are being adopted and tested. RBC is the first
to announce a pilot of the Visa mobile platform in Canada, built
using NFC on the phones, one of the emerging technologies I alluded
to that has only recently become a leading solution. As mobile
devices roll out that can support mobile payments, you will start
to see a greater investment to build products that can be supported
in a mobile world.”
In a nation that enthusiastically greets each new payments
technology, it would seem a foregone conclusion that contactless
mobile phone payments would be the next great application. In
September 2007, Visa Canada conducted a survey that found 51
percent of respondents would be interested in a phone with mobile
payment capabilities. Interest was significantly higher among young
people.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataBut recent fraud incidents have spooked Canadians, and one of the
industry’s challenges is selling people on the security of a
payment method that allows them to be charged without providing a
signature or PIN.
Alleviating security concerns
At least in part to alleviate those concerns, at the moment, the
Visa payWave technology can be used only for purchases of C$25 or
less in Canada. With the technology, users could choose to put a
password on their mobile device if they chose.
“The Canadian marketplace is already taking steps to introduce EMV
chip technology to Canadian cardholders, to improve security on all
transactions,” Ross said. “At RBC, we know that contactless
payments need to be just as secure to maintain the confidence of
Canadians. That is why we have announced plans to launch
contactless payments, using either a card or a mobile device,
leveraging the same security measures based on EMV. These
transactions will not require a PIN but consumers are still
protected against counterfeit skimming through the security of
EMV.”
RBC’s launch of mobile payments in Canada is closely aligned with
the country’s migration to chip card technology. The bank is
currently participating in the payment industry chip trial taking
place in the Kitchener-Waterloo area by issuing chip cards to its
clients, and the programme is expected to expand nationwide in
2008.
The cards feature a chip that stores data, and users must authorise
transactions by entering a PIN. RBC is the leading issuer of chip
cards in Canada, processing over 11 million chip transactions to
date worldwide.
In the two years since the first contactless cards debuted in
Canada, the programmes have been largely limited to co-branded
cards carrying the MasterCard Worldwide PayPass application, in
partnership with some merchants in the target categories of
quick-serve restaurants, fuel retailers, grocery stores and movie
theatres.
RBC is the first of Canada’s major banks to launch a contactless
programme. Until now, the Canadian card-issuing affiliate of New
York-based bank Citigroup had been the lone contactless
player.
In late 2005, Citi Cards Canada tested its first contactless cards,
putting a PayPass application on its co-branded card with Petro
Canada, one of the country’s largest fuel retailers. Citi later
expanded contactless to some of its other card products in
Canada.
Heading for critical mass
Now, with food chains such as Tim Horton’s and
McDonald’s accepting MasterCard’s PayPass, contactless payments may
well be gaining critical mass among merchants.
Canadian issuers seem to be moving past the question of whether to
issue contactless cards complying with the international EMV
standard or stick with magnetic-stripe transactions. Canada plans
to move all of its magnetic-stripe cards and terminals to
fraud-busting EMV technology over the next several years.
Citibank and others are using magnetic-stripe transaction data and
protocols for their first wave of PayPass contactless cards, just
as all banks do in the US. MasterCard has said it will eventually
move the contactless transactions in Canada to the EMV
standard.
On the mobile commerce side, RBC realises that, ultimately,
Canadian telecommunications providers must be involved at some
level for widespread acceptance to occur. None of the three top
wireless carriers in Canada – Telus Mobility, Rogers Wireless and
Bell Mobility – is involved in the project. All three do, however,
belong to a joint venture called Wireless Payment Services that is
working on standardised wireless payments.
Wireless Payment Services launched a mobile phone airtime top-up
service using credit cards and payments from current accounts in
2007, with the longer-term goal of allowing purchases in stores at
the point of sale via mobile phone.
