A recent move by American retailers to block Apple Pay and Google Wallet is merely a negotiation tactic in ongoing disputes with credit card companies, and has no bearing on Canadian prospects for the services, according to a Toronto-based mobile payments analyst.
However, Canadians vying for the services to come north of the border shouldn’t hold their breath, said Christie Christelis, president of Technology Strategies International Inc., a company that specializes in the payments and mobile sectors.
“It’s a very limited market,” Christelis told CDN, adding that according to his research, only one in six Canadians had a phone with NFC enabled. “Even with the iPhone 6, how long will it take for the install base to get to the point where everybody has an NFC phone?”
Barely weeks into its launch, Apple Pay is already hitting roadblocks.
Under the Merchant Customer Exchange (MCX) banner American retailers led by Wal-Mart Stores Inc., Best Buy Co., 7-Eleven Inc., Sears Holdings, Shell Oil Products US, Sunoco Inc. and Target Corp. are developing their own mobile payment method called “CurrentC”.
However, instead of NFC technology, CurrentC relies on Quick Response (QR) Codes all in an effort to circumvent credit card companies, with whom retailers have been in dispute over fees for years. In addition, several MCX retailers disabled Apple Pay and Google Wallet options at their checkouts over the weekend.
To Christelis, the retailers’ move to block NFC payments is nothing more than “posturing.”
“I don’t think that that’s going to be a sustainable position for MCX,” he said. “If I have an iPhone and I can’t shop at Wal-Mart, I’m going to be pretty pissed off. Are we prepared to alienate 20 per cent of our market? I think the answer is no.”
Despite this, mobile payments still face many challenges even in Canada where NFC infrastructure, currently available at around 350,000 terminals, is more developed and growing quicker than in the U.S., according to Christelis.
In comparison, there are just over 200,000 NFC-enabled terminals found in the United States for some several million point of sale units, according to Global News.
Nevertheless, Christelis said companies are waiting to break into the more populous American market before the service is brought to Canada. Just this week, Optimal Payments, an online payment provider, launched an iOS SDK for Apple Pay that would allow developers to add the service as a payment option for in-app purchases.
“We believe that Apple Pay will be a catalyst to accelerate the adoption and growth of mobile payments,” Danny Chazonoff, chief operating officer of Optimal Payments said in an email. “[We] will support Apple Pay, when the service becomes available in Canada.”
To Christelis, behind all the competition, there is an underlying assumption that the mobile payments market is going to take off.
“People are going to expect to be able to pay using mobile.”