Race begins in Canada to cash in on mobile phone payments

Soon Canadians will be able to pay for purchases by waving their cell phone in front of a sensor. With both Visa and MasterCard currently running trials, experts say Canadians should become more aware of this technology - its potential and pitfalls.
6/9/2008 8:05:00 AM By: Brian Jackson

Early in the race to get Canadians buying things with their mobile phones, MasterCard might be ahead by a nose, but Visa has unveiled a wiser partner choice, says an analyst.

The two credit card behemoths have adopted different tactics when introducing the concept of paying for purchases by waving your cell phone in front of a sensor.

Both are using Near Field Communications (NFC) technology already embedded in some cards, but the companies have announced different types of partners.

Visa has been working with the Royal Bank of Canada (RBC), since January 2007, as the main financial partner in bringing mobile payment platform to the Canadian market. MasterCard on the other hand, has highlighted its partnership with Bell Canada at the end of May.

“I'd lean towards the financial institution myself,” as a partner, says Mark Tauschek, senior research analyst with London, Ont.-based Info-Tech Research Group.

“If RBC says now you have an option of having your Visa tied to your mobile device, I think that their entire card base becomes an opportunity to get the mobile platform out there,” he says.

MasterCard probably doesn't care which what financial institution is issuing the credit card, Tauschek says.

The Bell partnership ensures Canadians will have access to phones that carry the RFID chips needed for the technology. MasterCard calls their version of the system PayPass, while Visa has dubbed theirs payWave.

Visa and RBC have yet to unveil their telecommunications partner, but have been talking with the big three wireless providers, says Anne Koski, head of payments innovation at Toronto-based RBC.

“We're in ongoing conversations… it is up to the industry to talk through and come up what the structure is going to look like in Canada, so at the end of the day the consumer wins,” she says.

RBC is the second-largest Visa card issuer in Canada, Koski adds. The bank has also converted more chip-to-chip transactions than any other bank, with a total of over 25 million.

Both credit card companies are in the pilot phase of their service rollout. MasterCard plans to conduct a closed trial with its own employees as well as Bell's.

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