Tuesday, 15 May 2012

CIBC, Rogers to let customers pay by BlackBerry.


CIBC, Rogers to let customers pay by BlackBerry. The only question – at what cost
By Francine Kopun
One day soon, wallets bulging with credit and loyalty cards, building access passes and identification papers will be a thing of the past.
Everything will be loaded onto smart phones – at least that’s the hope of cellphone carriers, banks and credit card companies.
On Tuesday, CIBC and Rogers announced a step towards that future; a partnership that will allow customers to pay for purchases by pointing their phone at a card reader.

The credit card information will be stored in the phone and accessed using an app.
There will be no fees to consumers. But the system gives Rogers new access to the credit-card revenue stream: Roger will charge CIBC for the service.
Dan Kelly, senior vice-president of legislative affairs for the Canadian Federation of Independent Businesses, said he has no doubt that once such systems are securely in place and widely used, new higher fees for processing mobile payments will be charged to merchants.
And the merchants will have to pass the cost along to consumers.
“With the combination of banks that love fees and cellphone companies that love fees, I feel absolutely certain that there will be significant new fees coming to merchants in the years ahead. Our guard is not down on this,” said Kelly.
He said the current credit card payment system in Canada is highly sophisticated and complex, with credit card companies, payment-processing companies, banks – and now cellphone companies – all taking a cut of sales.
Fees to merchants for processing credit card payments range from 1.5 to 3 per cent of sales, according to Kelly. He said banks that issue the credit cards get about 80 per cent of those fees.
Kelly foresees more partnerships and points out Rogers is planning to issue its own credit cards.
“This is dipping the first toe in the water about an inch, but there will be a deep dive on the part of financial institutions and mobile companies in the months ahead and that’s what merchants have to look out for.”
Last September, BMO rolled out a Tap-and-Go payment system that allows credit card customers to make purchases using a sticker affixed to their mobile phone and receive an instant email verification of each transaction.
The tag works on all phones and with all telecommunications companies.
TELUS is working with a number of banks to offer mobile credit card payment services in the near future, according to spokesperson Elisabeth Napolano.
No launch date has been set for the CIBC-Rogers product.
It will work using phones equipped with NFC – Near Field Communication – technology embedded in SIM cards inside the phones.
BlackBerry smartphones already have the capability. Frank Maduri, the senior director in charge of the mobile wallet portfolio at RIM, says he thinks the capability will soon become standard on all devices.
“We’re just happy to be first.”
He said the technology could one day be used by doctors to scan patient charts in hospitals. It could mean the end of the building pass for office workers.
But David Skillicorn, a professor in the school of computing at Queen’s University, said adding credit card data to cell phones could make them a more attractive target for hackers.
Canada is a relatively immature market when it comes to mobile phone payments, according to research from Deloitte Canada. According to the study, Dialing In, The Future of Mobile Payments in Canada, consumers in Japan have long been using cellphones to pay for train fares. Kenyans use their mobile phones daily to pay shopkeepers and transfer funds to family and friends.
Deloitte estimates that by 2015, approximately 60 per cent of the population will have the ability to pay using NFC-enabled smartphones.

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