Payments Watch

In September, Interac, Mastercard and Visa Canada are planning a trial of chip cards (I understand using the EMV standard) in the Kitchener-Waterloo area just outside of Toronto according to ComputerWorld. Merchants in the region will be set up with EMV enabled POS devices that will accept chip based credit and debit cards.

The ComputerWorld article hits the nail on the head though:

Canadian merchants may face a significant upgrade to their point of sale systems following an industry trial of … debit and credit cards that incorporate a microchip …

Source: ComputerWorld.

So it will be interesting how it plays out. As I’ve argued, there has to be some kind of economic incentive for merchants to make such an upgrade. Shifting some liability to merchants for fraudulent card use is one way, another strategy for adoption is to have a certain level of backwards compatibility (e.g. support for chip and magnetic stripe) for some time. But hey, that’s just my opinion. According to the article above, the Toronto Dominion bank has already performed successful chip card transactions as an ATM in one of their offices. On the heels of this news, the good folks at the Mercator Advisory Group have published a new report on Sizing Canada’s Growing Card Market. According to Mercator, credit and debit cards have become preferred methods of payment for many Canadian consumers who are amongst the most frequent general purpose card users in the world.

There were more than 101 million cards in circulation across the country in 2006 and Canada’s card market continues to grow, with consumers and merchants seeking new payment products that offer more efficient and secure ways to make transactions (a nice segue to the chip card trial!):

Canadian consumers are highly educated and technologically savvy. They love using their debit and credit cards, and are constantly seeking new and innovative ways to meet their various payment needs, faster and more conveniently. As a result, the card market in Canada is poised to enjoy continued growth, and will undoubtedly offer an even greater variety of payment products and services to its customers.

Source: Elisa Athonvarangkul, Analyst, International Advisory Service, Mercator.

The report presents an overview of the current state of the Canadian payment card market, an analysis of recent market trends and metrics, a discussion of EMV compliance, and a review of contactless payment and new products and reward programs.

Note: In case you don’t know, the Interac Association is a Canadian organization linking different financial institutions and other companies for the purpose of exchanging electronic financial transactions. Interac Direct Payment is Canada’s national debit service for purchasing of goods and services. It basically provides the network that supports the use of debit cards in Canada.

BTW I took a break for a couple of weeks to enjoy the summer weather. That’s why I haven’t been around for a while!