Despite the buzz about the mobile wallet, Canadians still aren’t keen on reaching for their smartphones at the checkout.
New research from PayPal found smartphone and tablet users in Canada are generally less likely than Americans to have used their phones for mobile payments. Canadians were also somewhat less likely than Americans to say they might be interested in mobile payments in the future.
The survey found 8% of U.S. respondents had used an app to make an in-store purchase compared to 7% in Canada, and 5% in the U.S. had tapped to pay with NFC technology versus 2% in Canada.
One reason mobile payments haven’t caught on is that debit and credit cards are easy to use, especially now that new tap technology is available, said Stephen Popiel, VP at global research firm GfK. “The ability to just pull out our card and [pay] is so deeply engrained. The process is easy and it’s seamless for consumers to use.”
A global survey conducted by GfK last fall found only about 2% of transactions in Canada are made with a mobile device. About 21% of the 1,000 Canadians polled said they had made a mobile payment in the past six months, compared to 33% of American respondents.
“A lot of Canadians are waiting to see who’s going to own the mobile wallet and the corollary to that is ‘what’s my bank going to do?’” said Popiel. “For a lot of people, the mobile wallet concern is ‘who owns my money and who’s looking after it?’ We’re so deeply trained on having the big six banks look after us, that [consumers] want to see what the banks are doing before they actively embrace mobile payments.”
A 2014 survey by Tapped Mobile, App Promo and Brand Spark International bears this out. Respondents said they trust major Canadian banks the most to provide a mobile payment system (52%). This is followed by: major credit card provider (50%), PayPal (40%), Interac (32%), Apple (18%), Canadian Tire (11%) and Google (11%).
“Canadians have a love affair with their banks,” said Jed Schneiderman, co-founder and president of Toronto-based Tapped Mobile. “[They] love and trust their banks. And not all the Canadian banks offer mobile payments, so I think that’s one big impediment.”
Another hurdle is mobile payment options just aren’t offered at many retailers. Schneiderman believes more touchpoints at the retail level will help drive adoption.
“We’re seeing that with being able to tap your credit card versus swipe,” said Schneiderman. “What we’ve learned from the credit card space is there has to be mass distribution in order to drive the habitual nature of paying for something.”
For retailers, cost is a big barrier to rolling out mobile payments, noted Jennifer Lee, partner, national retail and omnichannel leader at Deloitte Canada. “There has to be a business case for it,” she said. “To swap out a POS [terminal] is not cheap. It could be anywhere from $500 to $2,000 per POS. So if you’re a huge retailer with a big store network, the costs really add up.”
Lee believes the biggest hurdle in widespread adoption of mobile payments is there’s not a clear value proposition for consumers. “If mobile payments are considered more convenient and it actually saves you time and money, then I can see the Canadian consumer adopting that,” she said. “But we don’t see the convenience factor yet because it’s not universal and I don’t think we actually see how we’re going to save money.”
Privacy is another big concern for Canadians. The average Canadian may have eight loyalty cards in their wallet, but they’re reluctant to put all their personal information in one location, noted Lee. “We’re okay [having] the cards in our wallet. But putting everything on one device… Canadians are not there yet in terms of how their privacy is being respected and what kind of information is being collected about them.”
Despite the hurdles, Deloitte Canada sees 2015 as a “tipping point” for retailers, banks and telecoms to adopt the technology.
“2015 will be the first year in which all of the requirements for mainstream mobile payments – satisfying financial institutions, merchants, consumers and device vendors – have been sufficiently addressed,” said Duncan Stewart, director of TMT Research at Deloitte Canada, in the firm’s “2015 Canadian Technology, Media & Telecommunications (TMT) Predictions” report.
But while more retailers may rollout mobile payments this year, Deloitte noted, “it remains to be seen” if Canadians will change their minds on mobile payments.
