Mobile payments are growing in Canada. Here’s how to keep your digital wallet safe

Mobile payments are on the rise in Canada, according to a recent report that is just the latest in a growing series of studies documenting the trend.

Last month, Interac – a Canadian interbank network – reported more than one billion Interac Debit mobile transactions in a 12-month period.

Interac data showed an increase of 53 per cent year over year in the number of Interac Debit contactless payments made at a point of sale in Canada using a mobile device, such as a smartphone or wearable, between August 2022 and July 2023.

Interac’s report shows the “future is mobile,” said Omar Fares, a lecturer at the Ted Rogers School of Retail Management with Toronto Metropolitan University. But while the technology provides a series of benefits, there are “a wealth of security risks” that come with it, and Canadians need to be mindful of how to stay protected.

“While the technology is accessible and convenient, there’s also that risk factor of, well, how is my data being used? How is it being secured, and is the technology on its own secure?” he asked.

“For the most part it is, but from time to time they may happen.”

Interac’s data showed an increase in consumers using their mobile device as opposed to a physical card.

Mobile payments’ share of in-person transactions rose from 18 per cent fiscal year-to-date in 2022 to 24 per cent fiscal year-to-date as of July 2023, Interac said. That month, 25 per cent of Interac Debit contactless payments were by mobile device.

Nader Henin, assistant vice-president of commerce with Interac, told Global News the data is evidence Canadians are growing more comfortable with mobile payments.

“One of the key data points that we have concluded from the recent survey, which revealed that approximately two-thirds of Canadians believe that in the near future, there will be no need to go out with your physical wallet, knowing that they can pay with their smartphones or smartwatches anywhere, any time,” he said.

“It’s definitely an exciting time to see how Canadians have quickly adopted mobile payments.”

Furthermore, according to new research from Interac, Gen Z Canadians are more likely to pay with a mobile device. Nearly eight in 10 (78 per cent) of Gen Zs polled complete in-person transactions using their smartphones.

But the research also showed that Gen X and baby boomers are embracing the payment method.

The survey found that 71 per cent of Canadians believe there should always be the option to choose to pay by debit when paying digitally, online or in person.

“Our survey also revealed that Gen Z have been influencing the behaviour of Gen X. Given that they have been seeing their family members and relatives using the mobile payments, they started using it. The other interesting data point that our survey revealed is that approximately half of the Gen Z have been teaching their parents on how to use mobile payments,” Henin said.

“So we took a journey on how more of the Gen X started using mobile payments for in-store or online purchases, and that’s kind of like 100 per cent Gen Z have been influencing their behaviour.”

Interac’s report is just the latest to document what is a growing trend in Canada.

In March 2022, a report by the Canadian Bankers Association said that in the next five years, tap-and-go payment will increase by 43 per cent.

On Oct. 4, 2022, Payments Canada released a report that found contactless payment transaction value increased year over year in 2021 by 18 per cent, and mobile payments volume and value each grew by 13 per cent year over year.

As mobile payments increase, the responsibility for safety falls on both the provider and consumer, Fares said.

Developers of mobile payment systems have to consistently update their services to be “one step ahead” of possible risks, and develop tools that allow for safety and security, he said.

Henin said transactions pass through the Interac Token Service Provider, a tokenization platform for digital payments that allows consumers to complete a transaction without exposing their financial information.

“It’s also worth mentioning that even if this unique digital identifier, if someone got access to it, it’s not reusable, so it’s not going to be exposing the customer financial information by any chance, and eventually it’s going to significantly reduce the risk for customers and for merchants as well,” he said.

Consumers, on the other hand, have a responsibility to monitor their bank accounts and maintain safeguards, Fares added.

Aside from checking bank accounts regularly for unusual activity, Fares suggests Canadians implement multi-factor authentication in their mobile wallets, avoiding public Wi-Fi networks and closing down near-field communications – which enable mobile payments – when not in use.

“It’s very important to have that turned off when it’s not used because what can or may possibly happen is it picks up (a signal) and there are certain activities that may happen as a result of not taking these safety measures,” he said.

“It’s very important that the phone doesn’t become an active device for payment all the time. It’s an active device of payment when one needs it to be, otherwise, it should not be an active device of payment.”

If Canadians discover an unauthorized mobile payment, the Financial Consumer Agency of Canada (FCAC) advises them to report it to the financial institution that issued the card. If their mobile device is stolen, contact the mobile wallet provider to disable it.

Most financial institutions offer an online security guarantee and other online protections, meaning Canadians may not have to pay for unauthorized transactions, the FCAC said on its website.