Tap-and-go payments have eliminated the need for consumers to punch in digits or sign paper slips each time they make a credit-card purchase. Now, the same technology is being integrated into smartphones— but how it will be used, by whom and how soon, remains murky.
Make no mistake: turning mobile devices into digital wallets by equipping them with near field communication (NFC) will transform the way we buy and sell goods. But small merchants may not want to be among the early adopters. "It will be a long time before consumers will leave their traditional wallet at home," says Juanita Gonsalves, a consultant with Emerging Payments Consulting in Toronto.
And Canada is unlikely to lead this shift. Mobile payment is in its infancy here, mainly due to uncertainty about how such transactions will be processed. To make payment by smartphone possible, many players—financial institutions, credit-card companies, phone-makers, telcos—need to agree on the rules.
Judging by the disparate early trials underway, expect a splintered market for a while. For example, CIBC, Rogers and RIM have teamed up on the Suretap system. The catch is that it's limited to NFC-enabled BlackBerry users on the Rogers network who bank at CIBC. Apple fans, meanwhile, can forget about NFC-enabled payments, as the company intentionally left the tech out of the latest iPhone.
So, where does that leave you? If you're a retailer with a point-of-sale terminal that incorporates NFC technology, you already can accept payment via, say, the Google Wallet app if that's how a customer wants to pay. If you don't have an NFC terminal, not to worry—you're not alone. Only about 10% of terminals in Canada are NFC-equipped. Consider getting an NFC terminal when you make your next hardware upgrade. In the meantime, says Doug Macdonald, a senior manager with Deloitte, "Small retailers can wait for the dust to settle with the big players."