Canadian Wallets Add Loyalty in a Pre-Apple Pay Push

Mobile payment initiatives in Canada are adding perks such as shopper loyalty programs, which can help differentiate the bank and carrier-branded mobile wallets when Apple Pay arrives.

The RBC Wallet, for example, will soon enable consumers to load loyalty cards to their smartphones and receive digital receipts.

"This is the natural evolution. It's about adding convenience to shopping and transforming the consumer's experience while in the store," said Jeremy Bornstein, head of payments innovation at RBC.

Consumers with devices running Android 4.4 or higher will be able to manage and redeem points with more than 100 loyalty programs, a feature that will be ready within the next few months, Bornstein said.

Digital receipts, which will follow the loyalty feature, allow consumers to more easily keep track of purchases, Bornstein said. Shoppers can also contact or locate a merchant from the receipt, track a return or warranty period or reconcile receipts with banking statements.

"It's about a connected experience. We believe this will launch mobile payments into the mainstream," Bornstein said

RBC recently took host card emulation, technology that facilitates mobile payments without requiring access to a phone's secure element, out of pilot and received a U.S. patent for its Secure Cloud payment security system. The bank also updated its mobile wallet software around the same time.

These developments are designed to make it easier for the bank to add other services to mobile payments beyond transaction capabilities. \

"Since the new solution debuted seven weeks ago, the response has been spectacular," Bornstein said, adding mobile payment adoption has tripled during that time. RBC did not disclose its total mobile wallet adoption, though Bornstein did say adoption had been gradual since the mobile wallet's launch in January 2014, attributing the slow pace to the availability of similar card technology.

"We had very low expectations coming out of the gate. Nearly 100% of cards in Canada are contactless enabled, so we did not expect an enormous response," Bornstein said. "The response on the older solution, which was carrier dependent, was strong but nothing to scream about."

Now that the foundation of mobile payments has been built, the next step is to make the process more interesting to consumers than paying with plastic, Bornstein said.

Other mobile payment projects in Canada are also beefing up.

Suretap on Wednesday announced a partnership with Points to integrate loyalty cards into the Suretap mobile wallet. Suretap will devote a section of its wallet app to storing information from rewards programs. Suretap was originally a Rogers Communications-led initiative, but has recently added support from Canada's other mobile carriers to reach most of the market.

"The 'pay' wallets are great for specific handsets, but banks would like more control over digital payments," said Zil Bareisis, a senior analyst at Celent. "HCE is one option to gain more control, which is why issuers like RBC in Canada, Capital One in the U.S., a number of banks in Spain and other markets are investing in developing their own wallets."

RBC and suretap are adding loyalty as Apple Pay, which supports loyalty programs but does not have one of its own, plans a move into Canada for later this year.

Apple Pay has generated lots of buzz since its launch a year ago, but its pending Canadian debut would appear to leave room for bank-led competition. Apple Pay has thus far named only American Express as a partner, excluding the other card networks and banks for the time being.

RBC is bringing its new mobile wallet features to Android users initially, though it hopes to also extend mobile payments to iOS users. The bank will release the first iteration of its iOS wallet soon, and will add loyalty and digital receipts later, Bornstein said.

"That would be the hope. Payments are different on iOS and are governed by the laws of the phone," he said. "We will do what we can."