TORONTO — Canadians love to pay and play with plastic, signing up for loyalty programs and flashing debit cards with greater ease than ever before.
According to Interac’s 2000 annual review, 62 per cent of Canadians prefer using cards compared to 37 per cent who use paper money.
That penchant for electronic payment has left retailers racing to keep up with the demand to process all those airmiles and reward points, not to mention getting authorization for credit card or Interac completed securely – all in about six seconds.
But even with widespread adoption electronic payment, merchants are being pressed to expand the ability to accept and process payments in new ways.
Canadian-owned firm Moneris Solutions, a payment card and loyalty program processing company, serves 300,000 customers in Canada. The firm routes payment information to banks and store databanks electronically. The company predicts it will be focusing on several new technologies in the next year. At the top of its list is the expansion of its wireless point-of-sale systems, followed by e-commerce and business-to-business transactions. The company is also interested in peer-to-peer payment that allows buying and selling on Web sites such as eBay.
“We’re seeing a shift in the marketplace away from phone line transactions to e-commerce and wireless transactions,” said Jim Baumgartner, CEO of Toronto-based Moneris Solutions.
Companies like GroceryGateway.com are already making using of Moneris’ wireless handheld devices, used to collect debit card payment when the dot-com grocer makes deliveries to customer homes in the Greater Toronto Area.
Moneris offers merchants the IVI Mobile Elite handheld terminal, which serves as a printer and PIN pad in one model, allowing for acceptance of electronic payments in just about any location.
While the original wireless units were priced at $1,200 three years ago and cost-prohibitive to most retailers, Baumgartner says the price of short and long-range mobile terminals is slowly coming down. He says wireless units will be most attractive for businesses such as restaurants, garden centres or cruise ships where payment approval is required, but obtaining a wire line is not always possible.
“People want to use debit at restaurants but they want the waiter to come to their table to do that,” said Wendy Porter, executive vice-president of North American marketing and sales for Moneris.
But one analyst doubts all retailers are ready to pay out the cost for new technology when consumers are, for the most part, willing to pay with current systems. Chicago-based J.C. Williams Group senior partner Jim Okamura points to the failed smart card pilots of a few years back as an example of retailers rejecting a technology when it was clear it was not going to take off.
“They decided existing solutions at point-of-sale were going to be just fine. Everyone prefers to be a fast follower as opposed to being leading-edge where you are paying a high per-unit cost. What will change it all will be consumer demand for certain solutions,” said Okamura.
Faced with a decision about acquiring a new technology, retailers may be reticent to buy into something new that doesn’t fit into the broader retail strategy.
“Until a retailer is afraid of losing money because they aren’t offering a certain type of payment solution, it’s hard to get them to add another cost that shaves their already thin margins,” said Okamura. “Unless there are some significant advantages, I’d say they are rather content. With Interac, however, retailers saw that ‘I will lose money if I don’t offer that as an option.'”
Moneris is also working with the oil and gas industry to provide customers with key fob-style radio frequency transponders used to pay for gas at the pumps.
Porter says Moneris is also preparing to provide retail customers with technology beyond the point-of-sale transaction. The company will soon release a store-in-a-box package to enable small retailers to create a Web presence for their business with little expense.
“About 40 per cent of our clients calling in for merchant services are asking for Internet services,” says Porter. “They may not be a Sears or a Canadian Tire, but they know they want to be there.”
Even though Moneris it is owned by the Royal Bank and Bank of Montreal, Baumgartner says retailers can move funds obtained from any transaction to any bank of their choice, unlike some payment processors.
“Our philosophy is switch your processor, not your banking relationship,” said Porter.
With an plethora of loyalty programs being offered to consumers, Moneris has also partnered with a B.C.-based company called Ernex, responsible for creating software to manage the collection of loyalty programs such as Shoppers Drug Mart’s new Optimum Card.
“We want to integrate the software from Ernex for clients who want to do loyalty programs but can’t afford to write their own code,” says Porter.