Debit’s mobile evolution

Brush up on the latest mobile payment tech and how it's bringing us closer to a cashless society.

This story appears in the September 2014 issue of strategy.

Imagine paying back a friend who bought your concert ticket simply by tapping your phone against theirs at the show.

It’s something Interac and IBM are working on making possible in the near future, using the company’s Flash tech.

Already this year, RBC launched its RBC Wallet powered by RBC Secure Cloud to enable NFC mobile payments, essentially transporting the code that allows for secure Flash payments on a debit card into RBC’s mobile app.

That makes it possible for RBC customers to pay at retail by waving their phone in front of an Interac Flash-enabled POS. With RBC also providing contactless mobile payment on credit cards inside its “mobile wallet” and other banks introducing mobile payment tech, Canadians are set to take another giant step towards a cashless society.

Interac and IBM are working to speed that along by making mobile payments using Flash possible for other financial institutions in the near future.

“We think there is going to be an acceleration of people who replace cash with electronic transactions and we think we are in the best spot for it,” says Avinash Chidambaram, director, mobile programs at Interac, noting debit cards are already carried by virtually everyone with a bank account.

“We believe mobile payments are going to become very significant going forward,” adds Alon Kronenberg, associate partner and mobile solutions lead at IBM Global Services. “I won’t be surprised if in a few years that’s the predominant way Canadians pay.”

A recent white paper from MasterCard Advisors supports the idea. While 40% of all transactions are still done with cash, its use has been slowly shrinking the past five years and is predicted to continue to fall.

“But we certainly think younger segments and folks who are very comfortable with technology are going to feel that comfort in moving to a phone,” Chidambaram says.

That should mean less time waiting to order a double-double – a good thing for brands wanting to improve the customer experience in store. It also offers an important channel for marketers to offer rewards and build loyalty.

Could this provide a new tool for combatting showrooming?

Correction: A previous version of this article stated that Interac and IBM worked on the proprietary RBC Wallet powered by RBC Secure Cloud. StrategyDaily regrets the error.