Barry Klatt

Barry Klatt

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Mobile payment on the way, but who's driving the bus?

The Canadian Bankers Association announced on Monday what amounts to the next step in the evolution of how Canadians buy stuff.


Sometime soon — details are not provided — we will be able to buy stuff in stores with a mobile phone thanks to a new set of common guidelines over how electronic information is exchanged agreed to by the country’s big banks and credit unions.


It is hoped that the guidelines will pave the way for a transformation in the way Canadians interact with retailers, an acknowledgement of the growing importance of smartphones in the way we live our lives.

All good news, but you have to wonder who’s behind this initiative?


Most of us know pretty much zero about the Canadian payments system but it’s the back-office infrastructure that allows consumers and businesses to write cheques, withdraw money from bank machines and buy stuff with by debit card every day. Last year, about $45-trillion passed across the system.  Unlike many other countries including the U.S. where there are numerous competing bank payment systems, in Canada there is just one. (Credit card companies such as VISA and MasterCard run their own operations.)


Critics say the lack of competition puts a damper on innovation and provides little incentive to keep user costs down. A federal task force report released in the spring warned that the Canadian payment system is falling behind and that could leave the country at a competitive disadvantage.


“[U]nless Canada develops a modern digital payments system, Canadians will be unable to fully engage in the digital economy of the 21st Century, leading to a lower standard of living across the country and a loss in international competitiveness,” said the report, entitled “Moving Canada into the Digital Age.”


Indeed, this latest initiative from the banks is an “outcome” of the task force report, according to the CBA press release.


Mobile banking already exists in Canada but usage is limited and the technology fairly limited, but other countries such as the United States, Japan, South Korea and some European countries have taken things further.


“There’s all kinds of ways this technology can come together,” said Stephen Gardiner, a consultant at Accenture in Toronto.


The CBA guidelines provide “all the things you would need for widespread adoption,” Mr. Gardiner said. “It’s a way for financial institutions, merchants, telecoms and others to come together to provide a safe and [robust] pament experience that will drive user choice and usability.”




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