Zoompass Tag on Smartphone with a MasterCard PayPass POS NFC Reader

Soon Canadians using the EnStream Zoompass person-to-person (P2P) payment service will also be able to pay using contactless NFC stickers at select locations across Canada.

The Zoompass Tag NFC trial uses 44mm by 33mm stickers made by Giesecke & Devrient and lets Canadians pay at establishments with Mastercard PayPass Point-of-Sale (POS) NFC readers such as Tim Horton’s, McDonald’s, Petro Canada, and Loblaws.

EnStream is owned by the three largest Canadian carriers Bell, Rogers, and TELUS. The Zoompass product lets Canadians send money to each other using mobile phones.

Like almost every other P2P payment product, Zoompass and Zoompass Tag require funding a prepaid account. Users sending money must put funds into the account before sending. Receivers must have an account to access their funds. If a receiver doesn’t have an account when the money is sent, they are prompted to sign up.

ZoomPass Prepaid Mastercard for Mobile Payments

Zoompass Tag avoids one key P2P problem in that it allows users to immediately spend money sitting in their Zoompass accounts using their MasterCard. This is not new however. PayPal has offered MasterCard debit cards for a while now.

So What’s New?

What’s new with this offering is that EnStream is offering phone stickers for use as an alternative to a plastic card.

The most obvious barrier to mobile contactless/NFC payments is that there are no phones with contactless chips in many geographies. Neither the U.S. nor Canada have any contactless phones in the hands of end users.

Ultimately, the only novelty here is that a P2P Payment provider is providing both a contactless MasterCard plastic card and a contactless sticker.

Stickers are a common alternative to the lack of chips in phones. In practice, users put the stickers lots of places beside their phones. A recent Discover NFC trial found that only 44% of users actual put the stickers on their phone. Employee badges were a popular alternative, possibly because the trial was with Discover employees.

Ultimately, the only novelty here is that a P2P Payment provider is providing both a contactless MasterCard plastic card and a contactless sticker. Canadian and American banks have been doing NFC trials for a while now using both cards and stickers.

What’s This All Mean?

Zoompass Tag is further proof that P2P Payments are a huge theme for 2010 in North America. There are many implementations in the works and a few banks are already live, namely CIBC, PNC, First Hawaiian, and FNB Omaha.

A June 2009 study commissioned by CashEdge found that 81% of online bankers want to do P2P payments. Increased availability of P2P products will only increase consumers’ comfort with using it. Use of P2P payments (both online and mobile) will in turn increase comfort with contactless/NFC.

More importantly, the EnStream and Firethorn efforts (which I covered a few days ago) clearly demonstrate that the wireless carriers are still focused on mobile payments.

If financial institutions don’t build mobile payments infrastructure, carriers will — in fact, they’re clearly doing it right now.

Banks need to provide an alternative to their customers if they don’t like the carrier-centric approach.

Banks and other financial institutions need to figure out how P2P and other mobile payments fit into their infrastructure and organization. Institutions also need to understand the positive and negative revenue implications and start managing the approach immediately.

Banks need to provide an alternative to their customers if they don’t like the carrier-centric approach.

CIBC iPhone Mobile Banking Application

CIBC is live with Canada’s first full-featured mobile banking iPhone application.

The native iPhone application provides a key money movement feature that have eluded American mobile banking solutions. CIBC leverages the Interac email money transfer system to allow sending money to others.

American bankers have been dreaming of a P2P payment system like this for a while.

The CIBC iPhone application also has all the standard capabilities found south of the border including full account management capabilities, including credit cards.

The application also provide a branch & ABM/ATM locator.

Scotiabank announced late 2009 it would offer a native iPhone application this Spring. Both Scotiabank and Desjardins have ABM locators in the app store.

Most Canadian banks have had browser-based solutions live since 2000 when the first wave of mobile excitement swept the world — then went nowhere for nearly a decade.

CIBC and Scotia are two back-to-back examples that the gloves are off in Canada and the mobile banking competition has begun.

Canadian consumers will definitely be the winners!

(This is a cross-post of the guest blog I wrote over at Jose HC’s “Mobile Strategy… understanding and navigating the mobile ecosystem” blog.)

Canada is still waiting for mobile financial services. Technology isn’t the problem.

Canadian Flag by Matt Bondy

Most of the big banks have offered mobile web based banking at one point or another. There have also been a number of mobile payment pilots, most notably at RBC. So far, long after the pilots complete, we’re still waiting for announcements of a broader rollout.

Canada has all the infrastructure in place. In many ways, Canada’s infrastructure is better suited to mobile financial services that in the United States, where mobile financial services is flourishing.

For example:

• Canada’s Interac Association provides a single, straightforward mechanism to connect financial institutions to merchant point-of-sale systems.
• Enstream is a consortium created by Rogers, Bell, and TELUS specifically to facilitate mobile financial services in Canada.
• Unlike the U.S., open lines of communication generally exist between the banks and wireless carriers. Nadir Mohamed, the CEO of Rogers, sits on the board of TD Bank Financial Group. George Cope the CEO of Bell Canada and the former CEO of TELUS is on the board at BMO.
• Canada leads the world in Blackberry smartphone ownership. Blackberry devices are well suited for mobile applications like financial services. In fact, Facebook just announced it has 12 million mobile users in Canada. Facebook usage is technically similar to mobile financial services.

So, why are we still waiting?

I personally think the market dominance of a few large banks is a major contributing factor.

Canadian banking is dominated by five large institutions: RBC, TD, BMO, CIBC, and Desjardins. In the U.S., there is more market fragmentation that encourages more competition. The U.S. behemoths like Bank of America, Wells Fargo, and Citibank must use their size to perform a preemptive strike on regional banks like M&T, PNC, and Huntington. Community banks and credit unions like Delta Community Credit Union with assets as small as US$1bn have announced plans for mobile banking. In Canada, the banks have the option to watch a handful of other banks and play wait-and-see.

Secondly, I think the iPhone delay is another major factor.

The long wait for the iPhone in Canada, the concern about data plans afterward, and Rogers-exclusivity, have also slowed the adoption of mobile applications. Mobile commerce consistently shows 2/3 of all usage coming from iPhones. First Canadians had to wait for the iPhone and now limiting iPhone usage to only Rogers subscribers limits the market to roughly 1/3 of the Canadian market at best.

iPhone users have a history of demanding what they want (like opening the iPhone to applications). The delay of iPhones in Canada simply put off the inevitable demands by consumers to their institutions.

The customer requests are visible on Twitter:

georgewenzel @RBC Any chance of you guys getting an iPhone-optimized mobile online banking site up and running? The current mobi site sucks on an iPhone.

stephenweppler @RBC any news on a iPhone app from RBC, the mobile banking site is horrible….?

fuzzylion Dear TD Bank – it’s seriously about time that you get a mobile app or at least a WAP version of your online banking website.

As the demands increase, banks will respond. And if the past is any indication of the future, once one bank releases a well-liked mobile application the rest of the banks will follow. Other financial institutions will join in once the market is tested and the benefits are proven.

Unfortunately, organizations that wait risk losing customers forever to the leaders.

Furthermore, followers that rush their efforts risk releasing failed applications which will likely result in:

• Further accelerating customer churn to their competitors
• Exponentially increase the difficulty and costs of adoption in the future; users that have had a bad experience are probably reluctant to try it again
• Costs associated with the having to do the work again (and again) and the lost opportunity.

These folks are smart people. I suspect we’ll see mobile offerings from these institutions soon.

Mobile Banking Requires a Long-Term Strategy. Canada is ready.

The call for strategic mobile banking is increasing and two recent articles are absolute must-reads.

First, Mobile Financial nicely sums up the challenges of mobile banking. Mobile Banking is not a simple add-on to an existing product. Mobile provides new ways to connect with your customer, strengthen loyalty, and deliver better services at a lower cost.

Mobile poses significant risks and technical challenges. Making a prudent decision on mobile banking requires three key “legs of a stool” a) deep collaboration between the business executives who know the long term goals for the organization, and b) the technology team who knows the intricacies of the current environment, and c) deep mobile expertise, which is often missing from most organizations.

Success requires all three legs of the stool and moving forward without all three almost certainly will result in failure (although some banks have set the bar extremely low so they can claim success, regardless). Mobile banking efforts now should be a base to build upon in the future. Doing it wrong now and having to start over puts you behind your competitors who did it right.

Secondly, Jose Colucci writes a manifesto (or offers a 12 step program) on why Canadian banks should offer mobile banking now. The Canadian market is ready. Canada is the land of the RIM and increasingly the iPhone. Canada has the technology, the infrastructure, the resources, and the demand for mobile banking to completely explode (in a good way) and be an example of success for the developed world.

I predict that when the first bank makes a bold move, the entire industry will follow. Canadian mobile banking will happen in a breathtaking, large rush.

In fact, in doing some Search Engine Optimization last week, I discovered one of the most searched terms related to mobile banking in Canada is “TD Mobile Banking.” Like most other Canadian banks, TD has a mobile web site that is keeping the proverbial light on for mobile. But like most WAP interfaces,  the TD site has some usability challenges which are almost certainly preventing widespread adoption.

And the point is that despite the usability challenges and lack of promotion, there is considerable demand for the product.

Canadian customers like Jose are clamoring for mobile banking.

C’mon CIBC, BMO, Desjardins, Laurentian, National, TD, and RBC. Let’s have it!