Tim Hortons and MasterCard deal highlights momentum of contactless payments in Canada

Apple fritters and double doubles went high-tech last week. On Friday, Tim Hortons and MasterCard Canada officially launched a partnership that will enable Canadians to not only pay for their iced cappuccinos and dutchies with a MasterCard, but do it without a swipe or signature. Referred to as "tap and go," the new payment method combines traditional payment networks with RFID technology. "For MasterCard, this partnership represents a watershed in our history here in Canada," MasterCard Canada's President Kevin Stanton, told a small audience at a Tim Hortons near the coffee giant's Oakville ON headquarters. The partnership could also be a financial windfall; MasterCard is currently the exclusive card accepted at Canada's favorite coffee shop."For Tim Hortons, this partnership represents shorter processing times for orders which will translate into shorter lines and superior customer satisfaction and loyalty. What's more, because people won't be limited to the cash in their pockets, be able to have increased sales as well," Stanton added.The deal includes the deployment of MasterCards' PayPass contactless technology in thousands of Tim Hortons locations across Canada. MasterCard's PayPass-enabled cards use an ISO 14443 standard and operate at 13.56 MHz. "This is really an open solution that we classify as interoperability across a multiple range of retailers and networks," says Nagesh Devata, MasterCard's VP, acceptance developments and new products. "It truly leverages all the strength of the MasterCard network." Customers simply flash their PayPass-enabled cards up to 10 cm away from a reader, their information is transmitted to a MasterCard network and authorization is achieved in as little as ten seconds. No receipt or signature is required, although Tim Hortons will provide a receipt upon request. During a demonstration, the elapsed payment time, with receipt, was approximately 30 seconds. Speed is vital to the coffee giant and the ISO standard carries a default speed of 106 kbps, although higher communications speeds, such as 212 kbps are possible. Devata expects that processing times will decrease as cashiers and customers become more acquainted with the technology. MasterCard's PayPass is used by 13 million cardholders worldwide and by several Canadian retailers, including Petro Canada and Rabba Fine Foods. Working with Santa Clara CA-based ViVOtech Inc., a contactless payment software provider, MasterCard's service is already being used in 500 Tim Hortons locations from Vancouver to Toronto to Corner Brook NL. "By sometime this fall, we'll be rolled out across Canada with MasterCard," said Paul House, CEO and President of TDL Group Corp., Tim Horton's parent company.Concerns that people may unintentionally pay for someone else's purchases were allayed by both companies. The actual exchange of information, Devata says, is exceptionally well-protected. "Because PayPass is leveraging chip technology and antennae technology it's as secure, if not more secure, than a typical transaction. There's an encryption of information that goes through when your card is being read and for small purchases, MasterCard has deployed a quick payment service (QPS) that mitigates any other types of risks. For small-ticket transactions, there's no requirement for a signature or receipt. In effect, it doesn't become a target for fraudulent activity," he explains. MasterCard holders that aren't PayPass equipped won't be forced to count their change either. They can pay for their crullers using the traditional swiping method and won't have to sign a receipt. Tim Hortons is also equipped with MasterCard's QPS, which allows small value transactions (less than under $25) to be processed without a signature."Cash can take a lot of time," says House. "We think that once consumers get a taste of the convenience and speed of PayPass, they'll wonder how they did without it in the past," echoes Stanton.

Tim Hortons and MasterCard deal highlights momentum of contactless payments in Canada

News | July 3, 2007

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