July 20 , 2010

Canadian mobile payments: A reality check

The hype surrounding mobile payments in Canada has largely dissipated, according to a conference report by Rob Burbach, senior analyst at IDC Financial Insights. His report, Mobile Payments in Canada: Is the Hype Over?, covered the June 2010 ACT Canada Cardware Conference, which focused on emerging card and payment issues for Canada.

ACT Canada is a payment industry association whose members include card issuers and acquirers, card associations (Visa, MasterCard, Amex and Interac), card technology vendors, merchants, and mobile network operators.

Burbach noticed a remarkable shift in perception regarding the outlook for mobile payments since the 2009 ACT conference.

“There is general recognition and acceptance that mobile payments will not become a killer app on their own, and the adoption in mobile payments will be linked to larger innovative developments as the mobile device becomes further integrated into the shopping experience of Canadians,” Burbach wrote.

Although the conference applauded Nokia’s announcement to include NFC (Near Field Communication) chips in all smartphones shipped in 2011, it was skeptical of Nokia’s expectation that the announcement would lead to the widespread adoption of mobile payments, Burbach reported.

Burbach was encouraged by signs that the payments industry is willing to set up an open and collaborative model for mobile payments in Canada. He pointed to the ACT Canada Mobile Strategic Leadership Team (MoSLT), a volunteer group drawn from banking, telecom and service companies, which was set up in 2009 to advance mobile payments in Canada.

“It is our feeling that the chance of success for the widespread adoption of mobile payments in Canada over the next five years is still quite good,” he said.

Burbach’s optimism regarding mobile payments comes with a warning: “There is still a long way to go before the players in the ecosystem trust each other enough to successfully build a business case that will allow the important technological investments to be made in creating an open collaborative mobile payments system in Canada,” he wrote.

“Merchants continue to feel that they are not viewed as full partners in the discussions around mobile payments, and the question of who represents consumers in these discussions remains an open question.”

Burbach’s full conference report, along with two in-depth studies of mobile payments in Canada, is available from IDC Financial Insights at idc.com.




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