May 10, 2016 10:54 am
Updated: May 10, 2016 8:27 pm

Big 5 Canadian banks to offer Apple Pay as mobile payments rise in Canada

WATCH ABOVE: Apple Pay to be offered by Big 5 banks in Canada. Nicole Bogart has the story.

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Apple Pay will finally be available to more Canadian consumers, as the Big Five banks gear up to launch the service to cardholders.

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Starting Tuesday, debit and major credit cards issued by the Royal Bank of Canada (RBC) and Canadian Imperial Bank of Commerce (CIBC) will support the mobile payment technology that allows iPhone users to pay for things using their smartphone or Apple Watch.

READ MORE: CIBC CEO unafraid of new tech entrants

Apple Pay will also be available to Canadian Tire Bank and ATB Financial cardholders this week. Those who bank with BMO Financial will also be able to use Apple Pay in the coming weeks.

CIBC and RBC customers will be able to use Apple Pay with their MasterCard, Visa and American Express credit cards, as well as their debit cards; however, Canadian Tire Financial will only support its credit card.

“We’re excited to work with Apple to bring a new way to pay that eliminates something many of us dislike: carrying a bulky physical wallet,” said Jason Davies, Vice President of Digital Payments for MasterCard Canada. “Apple Pay allows consumers to pay with their iPhone – an item most of us wouldn’t think to leave home without.”

WATCH: Apple Pay is being rolled out to many more Canadian consumers. Not sure how it works? Here’s Nicole Bogart to walk you through the setup.

According to a spokesperson with TD, Apple Pay will be available to its customers in “the coming weeks.”

“We have the most debit and credit card customers in Canada, and with the offer of yet another new mobile payment option, we’re building on our leadership position in digital payments,” said Teri Currie, group head of Canadian personal banking at TD Bank Group.

WATCH: Apple discusses its mobile payment system ‘Apple Pay’

Bank of Montreal (BMO) and the Bank of Nova Scotia (Scotiabank) will also roll out support for Apple Pay in the coming months.

The move marks a significant step for Canada’s adoption of mobile payments.

Canadians have been waiting a long time for Apple Pay. The tech giant first launched the service in the U.S. in October 2014, but Canadians weren’t able to use it until November 2015 – even then the launch was limited to American Express cardholders only.

Canadian banks – including CIBC, Scotiabank and RBC – have been busy trying to promote their own mobile payments apps.

READ MORE: Canadians prefer to pay with smartphones, credit cards over cash

But Canada is in a good position to be a world leader in mobile payments. According to a study conducted by market and consumer information firm GfK in February, Canadians consumers were more inclined to reach for their smartphones and credit cards to pay for things, instead of relying on cash.

Ensuring Interac – Canada’s domestic debit network – also works with Apple Pay is a big move for the platform. Without it, the service would have been limited to the credit cards.

According to Interac, Canadians are among the highest users of debit in the world, using Interac an average of 16 million times daily.

How does Apple Pay work?

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To use Apple Pay you must first input your debit or credit card information into your iPhone using the “Wallet” app.

Your bank or financial institution will create and transmit a unique device code, which is stored on a secure chip inside your phone. Your actual card number is not stored on the device – one of the key security features of Apple Pay, but we will get to that later.

WATCH: Smartphones just took another step toward replacing our wallets, as Canada’s biggest banks announced they’re partnering with Apple Pay. Shirlee Engel looks at how the mobile payment option could change how you pick up the tab.

When you go to make a purchase, you will use the Touch ID fingerprint scanner on your device to authorize your purchase at a payment terminal with Near Field Communication (NFC) technology – also known as the “tap to pay” machine.

 

A transaction code is then generated and sent to the financial institution, along with that unique device code, to process the transaction.

What do I need to use Apple Pay?

Aside from a debit or credit card from participating banks, you will also need an iPhone 6 or iPhone 6 Plus running the latest iOS software. Older devices won’t work, even with the latest update.

Is it secure?

Although security measures are never foolproof, Apple’s system does include many robust security features.

One of the biggest things to note is that unique device code that is created when you input your card information. Merchants get that instead of your real card number. A verification code is also created for each transaction, based in part on unique keys on the phone.

Even if hackers get that unique device code, Apple maintains they wouldn’t be able to generate the verification code without having possession of your phone, so fraudulent transactions would be declined.

Apple also maintains it knows nothing about your transactions, which are handled directly by the credit card processors.

If you lose your phone, your credit card provider could cancel that unique device code, which means you wouldn’t need to replace the entire card.

— With files from The Associated Press

© 2016 Global News, a division of Corus Entertainment Inc.

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