Report: Apple Pay Coming to Canada (April 20, 2015)
Apple Inc. is negotiating with Canadian banks to bring Apple Pay to Canada as early as November, with details about fees and security protocols at the center of discussions, the Wall Street Journal reports. Canada’s six largest banks, which account for about 90 percent of retail bank accounts, including Royal Bank of Canada, Toronto-Dominion Bank, Bank of Nova Scotia, Bank of Montreal, Canadian Imperial Bank of Commerce and National Bank of Canada, are considering adopting Apple Pay to meet consumer demand, according to the report. The iPhone has about a one-third market share in Canada, compared to about 20 percent globally, according to the research firm Catalyst. Canada also has a dense contactless payments infrastructure, with more than half of merchants’ POS locations NFC-enabled, industry analysts tell Paybefore.
To offer Apple Pay, Apple is requiring Canada’s banks to pay a fee of 15 to 25 basis points on credit card transactions, according to the WSJ. U.S. banks reportedly are paying 15 basis points per transaction on credit card transactions. Canada’s banks also reportedly have formed a consortium to address security concerns around Apple Pay and hired consulting firm McKinsey & Co. to look into the possibility of requiring Apple Pay users to enter a PIN for authentication, in addition to the fingerprint-based Touch ID approach Apple Pay uses in the U.S.
China and the U.K. also have been mentioned as likely markets for Apple Pay’s expansion though no details have emerged about a time frame for rolling out the mobile payments service in those countries. It’s likely each international market will have unique considerations in introducing Apple Pay, Zilvinas Bareisis, a senior analyst with Celent, tells Paybefore. “Security around card onboarding, tokenization services provision, how data are collected and shared by different parties and providing access to the payments token on the phone are just a few issues that are likely to emerge in commercial discussions between Apple and banks in other countries,” he notes.
But Canada’s banks likely are eager to work things out with Apple as a quick path to rolling out mobile payments to their iPhone-owning customers, Christie Christelis, president of Toronto-based Canadian payments consulting firm Technology Strategies International, tells Paybefore. “My guess is that you may find a Canadian bank or two holding out for a while, but it’s likely to be temporary.”
The report follows last week’s news that Canada’s Financial Consumer Agency amended its code of conduct to encompass mobile credit and debit card transactions to ensure merchants are aware of the their options and the costs associated with accepting mobile payments, and have the option to cancel their participation in contactless payments programs with 30 days’ notice.
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