Tech issues delay Visa, RBC mobile payments trial; still aiming for 2008 launch

Visa Canada and Royal Bank of Canada (RBC) say they're still on track to launch a mobile payments trial with southern Ontario merchants by year end, despite a few technical glitches. Visa Canada and Royal Bank of Canada (RBC) say they're still on track to launch a mobile payments trial with southern Ontario merchants by year end, despite a few technical glitches.Announced last November, the payWave trial involves using mobile phones to buy low value items at retailers. The handsets are equipped with near-field communications (NFC) chips that when waved in front of a specialized point-of-sale terminal allow consumers to purchase goods and services. The pilot project will start as a small staff trial and then move into a larger, but still limited, consumer test.Anne Koski, head of payments innovation at RBC's card division, says the lab testing isn't quite ready to shift to a staff trial yet, adding that there are still some technology issues that need to be worked out. In a new payment application such as this, she notes, it's imperative that it works every time and the experience is very similar to using a credit card to make a payment.With the wireless carriers now involved, the lab testing is also looking at how to activate a consumer's mobile payments-enabled cell phone after it's already been sold, explains Zack Fuerstenberg, director of new channels for Visa Canada. Traditionally with credit cards, the sensitive data are embedded by specific bureaus, but in the wireless world this will have to be done over the air, he adds."So we're changing and evolving the model pretty significantly," Fuerstenberg tells Report on Wireless. "So there's all kinds of activity there, ranging from security standards that we're developing to even business models of how do you make that work. You've got a very different ecosystem."Adding mobility to financial services isn't new. Consumers in some Canadian cities have been able to use their cell phones to pay for parking, but this has primarily been done through SMS and not NFC, or contactless payment technology. Trials in Canada of NFC-enabled handsets have been held before, but it hasn't yet resulted in any commercial services.RBC gives its customers the ability to check account balances, transfer funds, pay bills and even do person-to-person money transfers through its www.rbc.mobi mobile device-optimized website. But Koski says consumers want to be able to do more than just check account balances."There's an expectation that we're going to offer some kind of service that allows them to do a payment at a traditional point of sale terminal," she says.The benefit isn't just for tech savvy and on-the-go consumers though. Koski says that certain type of businesses will enjoy quicker customer throughput by using mobile payments. "Any place where there is something in it for the merchant ," she explains. "Where the merchant is looking to accelerate lineups, quick service restaurants, movie theatres, where there is something in it for both the consumer and the merchant."Even though there are still some minor challenges to iron before moving the trial out of the lab, a healthy percentage of Canadians appear anxious to get their hands on cell phones with mobile payment capabilities. According to a survey from Visa Canada, more than 50% of respondents were interested in getting a mobile phone that had this type of functionality.While previous mobile commerce initiatives have seen charges applied to the user's monthly cell phone bill, Visa Canada's research shows consumers aren't interested in paying for goods or services in that fashion.Fuerstenberg notes that the vast majority of respondents want charges applied to existing accounts. Canadian consumers, by a margin of seven to one, "thought a mobile payment should land on their existing credit or debit account rather than a mobile operator's bill," he adds. The sentiment was confirmed in another question that asked respondents who would do a good job of managing this type of payment service. Again, Fuerstenberg says, a major Canadian bank or credit card company topped the list rather than the wireless provider.Previous consumer research on mobile payments, done for RoW three years ago, showed the emergence of an early adopter market interested in using their handset to buy goods and services. The survey results indicated that 8% of respondents were extremely or very interested in using their cell phone to make purchases.When the trial does expand beyond the lab, it will continue well in 2009, according to Fuerstenberg. "Part of this also is you want to make sure there is enough time for consumers to really use the technology in their day-to-day routine and then get a better insight from them," he says.

Tech issues delay Visa, RBC mobile payments trial; still aiming for 2008 launch

News | July 17, 2008

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