OTTAWA – Mobile payments are going to be a rather tough sell in Canada, a conference in Ottawa this week heard. Not only are merchants reluctant to support and potentially pay for yet another payment channel, but technology and regulatory challenges could slow the broad adoption of mobile payments.
Speaking at the 2010 Mobile Money Forum, Christie Christelis, president of Technology Strategies International, explained that one of the major barriers to mobile payment uptake is due to the various forms they can take. Will they predominantly be a mobile web application or will radio frequency identification (RFID) play a role in their rollout, for example? He noted that near field communications, or NFC, is likely to be the dominant platform for mobile payments, but even then, use in the next five years won’t be significant.
“The point here is not to be confusing, but is to say we do need to understand whether the phone is simply a web access device or whether it is an application on the phone which is used for payments,” he noted.
One of the major hurdles hampering adoption here will be Canadian financial regulations, he added, pointing to the credit and debit card rules introduced by the Canadian government. Those regulations make it impossible to have competing debit platforms on a single card, meaning a debit product from one bank can’t co-exist on the same handset with a debit product from another bank. The concept extends to the mobile platform as well where a user could potentially only have one debit card “loaded” on the mobile device.
This issue was raised by Visa Canada during Industry Canada’s digital economy consultations earlier this year. The company pointed out that these banking regulations could have a significant and negative impact on mobile payments adoption because the new rules don’t allow multiple payment applications to exist on the same device.
“The practical effect of this is that a consumer who has Visa Debit, Visa Credit and Interac payment applications would have to carry three cell phones if they wanted to initiate all of these types of payments using a mobile phone. This impractical result severely limits the usefulness and practicality of mobile payments technology, and stunts the many new uses and benefits of chip technology,” Visa Canada said at the time.
On the technology side, there are still many things to work out. Will there be multiple forms of mobile payments or will there be a single standard. “The point here is that it’s not as simple as putting [payment credentials] on your phone. The other side of the market (the merchant community) has to be ready to accept it,” Christelis said. “It takes a while for that infrastructure to be in place.”
The TSI president isn’t too bullish on mobile payments advancement in Canada, particular for mobile phone contactless space. “It’s unlikely that within the timeframe of five years that we are going to see major mobile payments being rolled out,” Christelis said. “At the end of this period, we think that maybe there might be 500,000 phones which are NFC equipped.”
