Banks adopting mobile payment systems sign of strength for digital wallets: Expert
TORONTO – Canadians are growing closer to a future without the physical wallet.
TD Canada Trust, the second-biggest bank in Canada, is the latest Canadian financial institution to jump on the mobile payment bandwagon, giving customers the ability to make small credit card purchases through near field communication (NFC)-compatible devices.
As of Wednesday, customers with compatible Android and BlackBerry devices will be able to tap their devices on Visa payWave terminals to make credit card purchases between $50 and $100 using the TD mobile banking app.
The apps launch comes on the heels of the announcement that mobile payment startup Square will open a Canadian office in the fall – signaling Canadians’ growing interest in the digital wallet movement.
“This is non-negotiable – your wallet is going to disappear,” said Queen’s University business professor John-Kurt Pliniussen.
“The fact that conservative organizations like banks are now getting into it speaks to the fact that they’ve done their analysis and know that their customers expect this.”
TD isn’t the first Canadian bank to offer mobile payment solutions – CIBC released a “tap-and-go” app in 2012 for Rogers’ customers and recently partnered with Telus to expand the service.
According to a CIBC spokesperson, consumer interest in the app has been strong – however the company said it does not disclose growth numbers for competitive reasons.
“As we have added more devices to our offer over the last 18 months, our growth rate has accelerated,” a company spokesperson told Global News on Tuesday.
Though TD is the first bank to partner with all three of the big wireless carriers – Bell, Rogers and Telus – for their mobile payment service, the app may still face challenges when it comes to overall adoption.
The service uses NFC technology – something that is not available on all devices, leaving only six Android devices and one BlackBerry device compatible: the Samsung Galaxy S5, Galaxy S4, Galaxy S3, Galaxy Note II, Galaxy Note 3, HTC One M7, and the BlackBerry Bold 9900.
TD is also faced with fact that Apple does not support NFC technology in its popular iPhone lineup – however, the company is already looking at ways to address this problem.
“We are in the early stages – this is a convenience that comes naturally to customers. Our objective is to stay connected with the customer and try to offer it up to as many devices, and as many carriers, as possible,” Rizwan Khalfan, senior vice president of digital channels at TD Bank Group told Global News.
Though it’s currently rumoured that Apple is working on incorporating NFC technology into the iPhone 6, Khalfan suggested that if support doesn’t come from Apple there may be a workaround.
“The iPhone is something we need to solve – and we have a few ideas as to how we solve it. If Apple continues not to support NFC we will have to find a way to work around that,” he said.
Pliniussen added that banks moving towards mobile payments are a nod to the security behind these technologies.
“In the world of commerce, places like banks are known to have the most secure systems in the world – the fact that they are going ahead with this means that we shouldn’t be worried about the security,” he said.
TD’s app keeps credit card information encrypted using specialized NFC SIM cards on the device – which is why it needs carrier support. Users can also add a passcode to the app for further protection.
© 2014 Shaw Media