On May 14, 2012, the Canadian Bankers Association (CBA) published a set of voluntary guidelines to govern Canada’s emerging mobile payments marketplace. The guidelines, titled the Canadian NFC Mobile Payments Reference Model, establish a series of recommendations on mobile phone payment functionality, security features and the logistics of processing near field communication (NFC) payments, also known as “tap-and-go” technology.
Mobile phone payment systems, also known as mobile wallets, are capable of storing a user’s credit and banking information on chips known as SIM cards, and may also store other personal information, such as driver’s licenses, library cards and transit passes. Mobile wallets can enable users to make purchases through phone software, or by physically tapping their phones against NFC receivers to make automatic purchases without requiring signatures or PIN numbers. Such systems have become increasingly popular outside of Canada. By illustration, statistics published by Forbes indicate that U.S. mobile payments on “Black Friday” in 2011 soared by 538% in comparison to the previous year.
Mobile wallets and other alternative payment systems are allowing new entrants to compete in a field traditionally dominated by banks and credit cards. Rogers Telecommunications and CIBC have recently announced a partnership whereby CIBC will pay Rogers to store Visa and MasterCard information on Rogers’ phones. The arrangement will allow Rogers to essentially “rent” space on a user’s SIM card. Separately, Rogers has also applied for a banking licence to become a credit card issuer, signalling its potential to further develop its role in the payment processing industry.
While mobile wallets present a number of convenient features, they have also given rise to security, risk and privacy concerns. The CBA’s guidelines address some of these issues, including who may access data stored on mobile wallets, such as loyalty points information, coupons, transaction amounts, transaction times and transaction locations. However, while the CBA guidelines remain voluntary and address NFC phones only, the federal government has indicated that greater regulation of mobile and digital payments may not be far away.