Fragmentation hurts mobile payments adoption in Canada

According to the Ipsos Personal Cardholder Study, contactless credit or debit card payments are popular in Canada, as half of consumers made an NFC payment in the first half of 2017. However, mobile payments do not enjoy the same popularity. An article by Adrian Murphy, VP of Ipsos Canada, may explain why. 

Fragmentation adds friction to mobile payments 

The lack of a single mobile payment system that supports all types of cards (credit/debit and gift cards included) creates a fragmented landscape that frustrates the user. Although all major e-wallets (Android Pay, Apple Pay and Samsung Pay) are present in Canada, adoption has been slow. 

Android Pay, for example, is supported by three out of the five big banks in Canada. Canada’s two largest banks, RBC and TD, have their own native mobile payment app instead, making it more difficult for account holders to make a payment with a third-party e-wallet.

Apple Pay initially supported cards from American Express at its Canadian launch in November 2015. Apple has since expanded to be compatible with all five of the country’s largest banks, among others, along with MasterCard and Visa, as well as Interac debit cards.

Meanwhile Samsung Pay currently only works with cards from CIBC. The platform’s website states that support for more financial providers will be added, although no timeframe is given.

According to the Ipsos study, at the mid-point of 2017, while nearly 6-in-10 cardholders were aware of Apple Pay, only about half knew about Android Pay and just 4 out of every 10 were familiar with Samsung Pay.

Many retailers are still not mobile-ready 

Another factor inhibiting mobile payments is slow adoption of contactless-enabled POS terminals by retailers. As long as merchants and retailers continue updating their terminals, payments by contactless cards will increase. The study shows that 84% of credit/debit cardholders are aware of making a purchase using a contactless payment method. 

Consumer attitudes, behavior and concerns 

Mobile payments popularity, just like with any other product or service, is determined by consumer demand, which in Canada remains relatively low. The young generation, consumes aged 18-34, was the first demographic to use an e-wallet, thanks in part to their high trust in new technology. 

Security is also a main issue. 62% of cardholders aged 55+ feel that mobile payments are less secure than traditional payments, fewer than half of those aged 18-34 share the same concern. And 62% of female cardholders view mobile payments as less secure, versus 49% of male cardholders.