Why Canadians Are Going To Have Wait For Apple Pay

One of the features generating interest in the iPhone 6 Apple recently announced is the NFC based payment system called Apple Pay.  Customers will have the ability to store their credit card(s) on their iPhone and just tap their iPhone on the terminal at the till in any retail store or restaurant to pay for a purchase or meal.  

For us North of the 49th parallel we will have to wait for Apple Pay much like other goodies in the Apple ecosystem.  Launching Apple Pay in Canada will take an agreement between Apple and Canada's banks but will also require Canada's retailers and restaurants to install NFC enabled payment terminals who that haven't done so already.  These retailers and restaurants are still paying for the upgrade to chip and pin payment terminals about half a decade ago.  

Anybody wondering about Apple Pay coming to Canada will have to ask about Canada's Goliath in payment processing, Interac debit.  The answer depend on if the banks demand adding Interac support to Apple Pay.  Using Interac with Apple Pay in uncertain because the banks make more from credit cards than from debit card usage.  

Canadians are familiar with tap and go payment from credit and debit cards that NFC technology brings.  With the large number of NFC payment terminals already installed in retail stores and restaurants across Canada it will prove to be fertile ground for Apple Pay.  If Apple can get the banks to agree to let in Apple Pay it will be one of the best opportunities to sell the iPhone 6 in Canada better than any new generation. of iPhones ever before seen.

Why Payment By Cell Phone Probably Won't Fly In Canada

Capitalism is practically as old as time itself, but in recent years paying for products and services has been going through a high tech makeover. Cash, cheques, and even magnetic striped credit and debit cards are giving way to smart chipped cards to improve security, and integrity of electronic payment systems, the smart chip cannot be duplicated like a magnetic stripe can. Now non-contact technology using radio frequency identification (RFID) also known as near field communication (NFC) is making it's way onto our credit and debit cards to help make small transactions easier and quicker.

The next step as proposed by Google is to replace the credit cards with an app on newer Android Phones that have an embedded NFC chip.  It is also rumoured that Apple is preparing a similar feature for the next version of the iPhone.  As much as NFC based cell phones are being promted as the payment method of the future, there is a major hurtle that that will need to be cleared before paying with your cell phone will be accepted in Canada. 

Interac, Canada's ATM network and debit payment processing company owned by the banks choosen not to support smartphone based NFC payment systems.  At least a couple of the banks are dipping their toes into the NFC water.  Scotiabank and RBC are already issuing debit cards that are NFC capable that are branded as Interac Flash.  The biggest reservation the banks may have against digital wallets is the potential security risk posed by devices acting in place of the plastic cards the banks issue.  Just about all the tap and go payment systems have no user authentication such as entering a PIN or signing a slip.  Many people lose their cell phone more often than they lose their wallet, the potential for fraudulent use is that much greater. 

Further resistance is going to come from retailers who have already spent millions of dollars in the last few years to update point of sale systems to accept smart chipped debit and credit cards.  Many of those retailers have not installed NFC readers for their point of sale systems because of that potential of fraudulent use.  It will come down to whether NFC smartphones can earn the trust of retailers, banks, and Canadians to determine if paying with by cellphone will revolutionize the way products and services are paid for.