With Canada being one of the world’s more developed contactless-payments markets in terms of cards issued, more merchants there are starting to accept the tap-and-go transactions, the latest being 1,400 McDonald’s restaurants, which will do so starting this summer.
As part of its rollout, the restaurants will accept Visa payWave and MasterCard PayPass transactions. McDonald’s restaurants in the United States already accept contactless payments.
Canadian banks have issued 22 million contactless cards, David Orzel, head of market development for MasterCard Canada, tells PaymentsSource. “Canada is ahead of the curve globally, and a big reason is because [the country] migrated to EMV chip cards. So it was perfect timing to get really aggressive in the contactless space,” he says.
Canada began migrating to chip cards several years ago. The deadline for merchants to have EMV terminals ended in March (
MasterCard Canada says 18,000 merchant locations deploying about 100,000 terminals accept contactless payments.
Visa representatives were not immediately available to comment.
In terms of marketing, MasterCard Canada continues to focus on brand awareness, says Orzel. “We are very aggressive in marketing the PayPass brand, and most Canadians know what it is,” he says.
The payments company is ramping up for a summer marketing campaign in Canada, which typically includes print, television and outdoor ads, says Orzel, though he could not provide further details other than to say it is blanketing Toronto because it is Canada’s largest city.
Indigo Books & Music Inc., the largest book and music retailer in Canada with 96 superstores and 151 smaller stores, last month began to accept contactless payments to help speed up checkout (
Previously, primarily only drugstores and fast-food restaurant chains in Canada had opted to install the contactless-payment terminals on a large scale because the transaction speed helps get customers through lines faster, Orzel told PaymentsSource after the announcement, contending contactless transactions are about 15 seconds faster than traditional card-based purchases.
Canada’s largest coffee-shop company, Tim Horton’s, was the first big merchant to accept contactless cards three years ago, Orzel says. “That was really the tipping point,” he says. “When people started to see the value, the ease of use and [the speed of the] throughput, it did draw attention to contactless payments.”
George Peabody, director of emerging technologies at Mercator Advisory Group, echoes Orzel’s sentiment that the move to EMV smart cards paved the way for contactless cards in Canada. “You can look at the EMV rollout in Canada as a contactless breakout strategy,” he says, citing the 30-cent to 50-cent incremental cost to include contactless technology on an EMV smart card.
That two of the country’s major retailers, Tim Horton’s and McDonald’s, will be accepting contactless cards clears one hurdle for promoting the technology, says Peabody. “If consumers can use contactless payments where they eat and get their coffee, then they’re going to start turning to that payment type,” he says.
The other benefit from growth in contactless payments in Canada is that is lays the groundwork to a move to NFC mobile payments, which Peabody says should start rolling out in the next few years.
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