Canada’s three biggest mobile payment questions, answered

I am that person. The one who holds up the line during “coffee rush hour” between 8:30 and 9:00 a.m. at various Starbucks in the financial district, who fumbles in my wallet, finds nothing and ends up paying my $2.57 with my debit card. The process probably takes less than a minute but I can feel the glares behind my back, and I don’t blame them. Until we’re all living in a world of NFC mobile payments, however, that’s the way it’s going to be.

This week at the Canada 3.0 conference I had an opportunity to lead a session that looked at what near-field communications (NFC) technology will mean for all kinds of transactions between banks, retail stores, independent merchants at fairgrounds and, of course, consumers. The timing seemed right: CIBC launched an NFC payment system with Rogers late last year. RBC and Bell announced they would enter the fray later this summer. And yet Apple’s Tim Cook has dismissed NFC as being in its very early days. The resignation of a key exec responsible for Google Wallet has raised questions about its future in NFC and just a few days ago Forbes magazine ran the headline, “Are NFC payments dead?”

The people who joined my panel discussion are well aware of the challenges NFC payments face, even though they insist the technology holds incredible promise. Let’s address the biggest concerns head-on:

What if mobile payments mean more theft? It’s always possible someone could hack into a financial institution and steal your money, whether you’re using the swipe of a phone to pay for something or handing over your credit card. But Derek Colfer, business leader of global product innovation at Visa Canada, points out that NFC payments depend in part on having proximity to a device and having it in the correct orientation to work correctly. Would-be mobile phone pickpockets would have hard time getting close enough and in the right position to swipe away your data. In comparison, taking a plastic credit card or even just taking down the number on it is a lot easier.

Won’t mobile payments mean companies do a lot more malicious data mining? That one almost provoked a laugh from Jeppe Dorff, who leads transaction services for emerging business at Rogers Communications. “When I joined Rogers I thought I could walk into a data centre and see on a big screen all the activity of our users,” he said. “The reality is, it doesn’t work that way.” The main pieces of data most companies can access is your location and your account number so they can deal with troubleshooting. NFC-enabled payments won’t really change that, Dorff said.

Won’t this stuff take quite a bit of getting used to? Sure, but so did regular e-commerce through a desktop, but we’re all used to clicking through shopping carts and entering CAPCHAs by now, aren’t we? “We actually see this as making consumers a lot more efficient and productive,” said Lisa Campbell, deputy commissioner of the Fair Practices branch of the Competition Bureau. Consumers may soon be able to go on “geo-sprees” where the location information in their phone helps save time by not only processing payments but pointing them to the stores that will have the products they want. The main thing from her perspective is to make sure services are advertised clearly with any disclaimers about the collection and use of data.

And the fear that big players like Apple won’t get on board? Colfer, wasn’t too worried. “When Apple builds an NFC antennae into an iPhone, we’ll be ready,” he said, not even bothering to use the word “if.” Assuming the payment industry just has instill the same confidence in NFC among consumers. I think they’ll get there, but it’ll take more than simply putting their money where their phones are.