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Canadian Banks Overwhelmed By Mobile Payments Market

While innovation is generally welcomed with open arms by most, it’s also bound to shake things up. And in Canada, it’s done just that, as fast-paced innovation on the mobile payments front is causing banks to take one step forward and then two steps back.

Two of Canada’s Big Six banks were ready to strike a deal with digital payment solutions provider Proxama until they saw that smartphone apps had released new features.

“Things are changing so quickly, and that’s what’s delaying us,” says Ricky Ranjan, a vice-president of sales in North America for Proxama, to The Financial Post. “Every time we sit down, a new payment initiative is popping up. You just have to go back to the drawing board and say, ‘OK, how do we support this?’”

The problem is that in the meantime, banks in Canada, which build their business model on trust, could be losing great opportunities. This is partly due to the fact that banks want to be sure of what they are offering to their consumers. How can they keep up when Apple Pay, Google Wallet or Samsung Pay keep on flooding the Canadian market with new possibilities?

“Any time new information comes in, it delays the process because banks want to be sure they assess the entire ecosystem before deploying a solution,” Ranjan said.

One leader in testing the mobile payments waters is RBC.

“If you talk to any of the banks, except for RBC, they want to wait and watch how technologies are coming across,” Ranjan said. “Banks want to do something, but they don’t want to rush. They want to do their due diligence and come out with a strategy that can support that.”

Although Canada has been considered one of the “first movers” of mobile payments — partly because the nation is often quick to adopt new technologies — Canadian consumers are not moving as fast into the habit of paying with their mobiles, a disappointment for many.

In December 2014, just 21 percent of Canadian shoppers reported making a mobile payment online or in-store in the past six months, and online purchases made up 64 percent of those mobile payments, while 36 percent were for in-store sales. Mobile payments in Canada pale in comparison to countries like China (83 percent of Chinese shoppers have used mobile payments in the past six months), Korea (62 percent), and even the U.S. (33 percent).

In a recent press release, Pascal Caillon, general manager of Proxama North America, explained that its best bet is to educate consumers as well as issuers and banks.

To check out what else is HOT in the world of payments, click here.

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