Apple Pay may have a rough Canadian launch

Big banks reportedly concerned about technology coming ‘between their brand and their customers’

Canada’s early adoption of Apple Pay-ready point-ofsale technology, along with comparatively high iPhone usage, make it a logical choice for the first international rollout of the mobile payment app that debuted in the U.S. last October.

But while the top six banks that control the bulk of personal accounts in Canada may be open to supporting Apple Pay, they are reportedly concerned over high fees and branding.

In particular, the banks object to “onerous” commercial terms for Apple Pay, according to a report in the Wall Street Journal that said Apple is planning to launch its mobile payment system in Canada in November.

The Journal said the banks could face higher costs than their U.S. counterparts per credit card transaction.

Banks may also be reluctant to have Apple Pay “come between their brand and their customers,” said Greg Weed, director of card research at Phoenix Marketing International.

He noted that many banks and businesses in Canada are pushing their own mobile apps that offer Apple Pay functions, but with an Android or BlackBerry smartphone. In March, Royal Bank CEO Dave McKay told an investor conference in New York that Apple Pay, Google Wallet and other payment systems are getting in between shoppers and their banks.

He said banks will not have the same connection to their customers as they do with more direct methods of payment.

McKay said banks are on a “collision course” with companies including Apple over mobile banking, adding that he wants a payment system that would place the bank at the top of the transaction.

Because many retailers across Canada are already equipped with the chip and PIN readers needed for the iPhone-based Apple Pay system the country has been seen as an early candidate for expansion of Apple Pay. Apple has said it will make Apple Pay available in countries outside the U.S. but has offered no details.

So far, though, Apple Pay’s roll out in China has bogged down over regulatory concerns and talks toward a mid-2015 launch in the U.K. have apparently stalled due to fears about the privacy of bank customers.

“This is ultimately Apple’s story to tell,” a TD Bank Group spokesperson said in an email. “Once (Apple) announces what it is going to do in the Canadian market, we can then assess what our involvement will or will not be in the Apple Pay space.” “We don’t comment on rumours or speculation on behalf of third parties,” added Andrew Block, senior corporate communications manager at the Royal Bank of Canada.

Meanwhile, in the U.S., Apple Pay’s adoption rate came at 11percent of all credit card-owning households and 66 per cent of iPhone 6 owners, according to a report from Phoenix.

However, potential is being undercut by low repeat usage and lost payment opportunities, the report said.

“The demand is there . . . but so is the disappointment: 47 per cent visited a store that was listed as an Apple Pay merchant only to find out that the specific store they visited did not accept (or were not ready to accept) Apple Pay.”

Mary Monahan, director of Mobile at Javelin Strategy & Research, said, “Wallet space is still very much up for grabs by players including the customer’s own financial institution, PayPal, Google Wallet, and others.”