APPLE PAY ALMOST HERE
Soon you will be able to use an iPhone or Apple Watch to make payments, if you also have an Amex card,
Apple Pay will make its long-awaited entry into Canada by the end of the year, but only for a very select group of consumers. Here’s what you need to know about the newest addition to the Canadian mobile payment landscape. What is Apple Pay? Apple Pay is a mobile wallet launched in the U.S. in fall 2014 and earlier this year in the U.K. It allows users to pay for in-store purchases using their iPhones or Apple Watches.
It also lets users make online payments to retailers on their iPads and iPhones using apps. How does Apple Pay work? Customers fill out credit card information in the app and pay for purchases by tapping their phones on a terminal at a checkout.
In Canada, it will only be available at stores that accept American Express and have terminals that are enabled with near-field communication technology. American Express only? Yes, for now. Why? The exclusive deal gives Apple access to markets around the world, while only having to deal with one institution. In Canada, American Express largely acts as its own card issuer, with only one bank, Scotiabank, offering the card.
The deal also gives American Express first and exclusive use of a much-hyped product. The partnership returns some of the shine to the prestige brand after losing some cobranding opportunities such as its long-time partnership with Costco. How many people will this serve? American Express has the smallest Canadian market share of the big three credit card providers, which also include Visa and MasterCard.
The card’s 5-per-cent Canadian market share pales in comparison to its rivals. Visa captures 41 per cent of transactions, Interac has 32 per cent and MasterCard accounts for 22 per cent, according to an April 2015 study by The Nilson Report.
American Express did not respond to inquiries about how many Canadians use their cards or the number of retailers and restaurants that accept them.
Many merchants refuse to accept the card because the fees are higher than those for Visa or MasterCard.
Apple Pay will also only be available to Canadians with the newest iPhone models. Who else does this involve? The deal with American Express limits Apple’s negotiations with a complicated web of players from network carriers to credit card companies to banks.
Apple didn’t have to make deals with the telecom companies because the technology is “carrier independent.” As for the big banks, Apple said only that the “partnership in this instance is with American Express.” Are there plans to expand to other cards/banks? Apple wouldn’t say, but referred to a statement that said “we want to bring it to as many of our users worldwide as possible.”
It remains unclear whether it will be expanded to other banks and credit card companies, despite speculation over the past months they would soon welcome the payment system.
As the Star reported Tuesday, sources said negotiations with Canadian banks stalled over fees and security.
The fees Apple wants to charge, reportedly15 cents for every $100 in the U.S., could be an issue. The Big Five banks are also pushing customers to use their own mobile wallets, where fees aren’t an issue. Why does Apple Pay matter? Apple Pay’s limited availability means it is not yet the universal payment method that analysts believed would lead to wider-spread adoption of mobile payments.
However, the company’s “cool factor” could help raise awareness of the market.
The highly fragmented Canadian mobile payment landscape is rapidly changing. Most of the big banks have their own wallets, while Canadian companies such as Suretap and UGO are competing to be universal payment systems.
The options currently available are limited to specific cards and institutions. All options aside from Apple Pay are limited to Androids and BlackBerrys, which excludes about 40 per cent of Canada’s smart phones.
So far, mobile payments have yet to take off in Canada, even though it has wider adoption of contactless terminals than in the U.S.
Just 11 per cent of consumers said they would use Apple Pay at least weekly in a recent Accenture survey.