MasterCard is at war in Canada, and it’s not against who you’d expect
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Christina Pellegrini | August 26, 2015 8:28 AM ET
More from Christina Pellegrini | @chris_pelle
Tyler Anderson/National PostBrian Lang, president of MasterCard in Canada, says the company is working hard to obliterate cash.
TORONTO — In Canada, the biggest rival MasterCard Inc. is working to obliterate, according to its local president Brian Lang, isn’t Visa Inc., American Express Co., Interac Association or Bitcoin dealers. It’s cold, hard cash.
Almost two full years before Apple Pay made its U.S. debut last October, Canada’s CIBC introduced an app in late 2012 that let customers pay for things on their credit card with a simple wave of their BlackBerry. Hopeful that Canadian consumers would translate the interest for mobile payments they had seemed to convey in survey after survey into actual usage, others banks soon followed.
Continue reading.
“The benefit of Interac and Visa for me is that we’re competing towards the same goal of a digitally enabled country,” Lang said in a recent telephone interview. “I actually appreciate that (Interac) is advertising right now not to pay with cash and that there’s a much better way, that you can tap or pop in your card.”
Bills and coins, he says, are heavy, dirty and leave no ineluctable trace as they change hands. “Blunt tools,” he calls them. And yet, for all its warts and despite a concerted push for digitization, cash remains the most popular payment method, especially for cheaper-priced items under $10 at the corner store or coffee shop.
In the latest methods-of-payments survey, the Bank of Canada noted a 10-percentage-point decrease in the number of transactions paid by cash to 44 per cent in 2013 compared to 2009, a figure that is seen to have continued falling even further during the past two years. Conversely, credit card usage also jumped more than 10 per cent, with contactless payments growing to 19.3 per cent in 2013 from just five per cent in 2009.
According to the survey, a median $300 in cash is stashed for when cards aren’t accepted, when extra fees are slapped on low-value sales, during an electricity or network outage, or if there’s ever a run on our banks. (The Financial Times noted recently that global banknote production is rising five per cent a year, amid economic instability.)
Handout/Mastercard
The data show the low-priced category is a tough nut for credit to crack, with cash making up more than 60 per cent of sales worth less than $15 in 2013 and under half for those between $15 and $25. It is no wonder since three-fourths of people surveyed are holdings $5 and $10 bills in their wallets.
But that, too, is changing, as technology allows credit and debit cards to mimic what makes cash great.
The advent and widening acceptance of contactless payments, has made paying for a sale of, in most cases, up to $100 with a debit or credit card faster and easier. Interac, which has ads plastered in Toronto subway cars, for example, is spreading the word about Flash. Similarly, Visa has payWave, Amex has ExpressPay, MasterCard has PayPass. Together, these systems have transformed payments — and more change is likely on the way.
In 2014, 10 per cent of all credit-card transactions in Moneris Solutions Corp.’s network were done this way, a 200 per cent jump from 2013. MasterCard says almost all of its cards in circulation in Canada have what it takes for users to tap their card over a terminal instead of signing a receipt or inputting a security pin, and all but three of Canada’s top 30 merchants by volume have the equipment to accept a contactless payment.
In MasterCard’s Canadian network, contactless payments have almost doubled to one in four in-store sales by consumers in June, 2015, from 13 per cent in June, 2013. During its last nine quarters, MasterCard has seen its card count in Canada fluctuate between 49 and 56 million, less than five per cent of its total. Lang thinks he can use technology to persuade users to rack up bigger bills and fees in the next year or so.
“Over the next 12 to 18 months, we’re going to see a fairly significant move towards digitization,” he said.
The Purchase, N.Y.-based company has released a handful of I.T. products that try to smooth out points of friction: ShopThis! lets readers buy an item directly from a digital publication. MasterPass is a way to store card info online and proceed quicker to checkout. Pay With Rewards lets people redeem and keep track of loyalty points in real time. Qkr is a food ordering mobile platform at live events, which is used in New York City at Yankee Stadium and was also recently piloted at the Air Canada Centre in Toronto.
The assault on cash hinges on people keeping their bills in the bank and reaching for their credit cards even when they have enough money to pay for things on debit. Even as cash usage declines in Canada, a Bank of Canada spokeswoman noted in an email the value of banknotes in circulation has grown at the same rate as gross domestic product over the past 20 years.
“I don’t think too many people get up in the morning and say I cannot wait to make a payment today,” said Lang. “My guess is, that’s not really on the forefront of most minds.” But it’s on MasterCard’s.
Lang, who worked in Africa and the Middle East, praises Canada for its savvy payments network. It ranks second best in the world in MasterCard’s Mobile Payments Readiness Survey behind only Singapore. Once virtual wallets replace physical ones – and most people believe they will in due time – he predicts there will be no longer be a limit to how many credit and loyalty cards people will store in them and looks forward to that.
“I only have so many slots in my wallet today for cards,” Lang added. “If your cards are in a digital wallet, does it matter if you have five cards, 10 cards, or 20 cards?”
Financial Post
cpellegrini@nationalpost.com
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Republish Online
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Christina Pellegrini | August 26, 2015 8:28 AM ET
More from Christina Pellegrini | @chris_pelle
Tyler Anderson/National PostBrian Lang, president of MasterCard in Canada, says the company is working hard to obliterate cash.
TORONTO — In Canada, the biggest rival MasterCard Inc. is working to obliterate, according to its local president Brian Lang, isn’t Visa Inc., American Express Co., Interac Association or Bitcoin dealers. It’s cold, hard cash.
‘Thought it was going to be a big thing’: Canadians haven’t been so quick to pay with their smartphones
Almost two full years before Apple Pay made its U.S. debut last October, Canada’s CIBC introduced an app in late 2012 that let customers pay for things on their credit card with a simple wave of their BlackBerry. Hopeful that Canadian consumers would translate the interest for mobile payments they had seemed to convey in survey after survey into actual usage, others banks soon followed.
Continue reading.
“The benefit of Interac and Visa for me is that we’re competing towards the same goal of a digitally enabled country,” Lang said in a recent telephone interview. “I actually appreciate that (Interac) is advertising right now not to pay with cash and that there’s a much better way, that you can tap or pop in your card.”
Bills and coins, he says, are heavy, dirty and leave no ineluctable trace as they change hands. “Blunt tools,” he calls them. And yet, for all its warts and despite a concerted push for digitization, cash remains the most popular payment method, especially for cheaper-priced items under $10 at the corner store or coffee shop.
In the latest methods-of-payments survey, the Bank of Canada noted a 10-percentage-point decrease in the number of transactions paid by cash to 44 per cent in 2013 compared to 2009, a figure that is seen to have continued falling even further during the past two years. Conversely, credit card usage also jumped more than 10 per cent, with contactless payments growing to 19.3 per cent in 2013 from just five per cent in 2009.
According to the survey, a median $300 in cash is stashed for when cards aren’t accepted, when extra fees are slapped on low-value sales, during an electricity or network outage, or if there’s ever a run on our banks. (The Financial Times noted recently that global banknote production is rising five per cent a year, amid economic instability.)
Handout/Mastercard
The data show the low-priced category is a tough nut for credit to crack, with cash making up more than 60 per cent of sales worth less than $15 in 2013 and under half for those between $15 and $25. It is no wonder since three-fourths of people surveyed are holdings $5 and $10 bills in their wallets.
But that, too, is changing, as technology allows credit and debit cards to mimic what makes cash great.
The advent and widening acceptance of contactless payments, has made paying for a sale of, in most cases, up to $100 with a debit or credit card faster and easier. Interac, which has ads plastered in Toronto subway cars, for example, is spreading the word about Flash. Similarly, Visa has payWave, Amex has ExpressPay, MasterCard has PayPass. Together, these systems have transformed payments — and more change is likely on the way.
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In 2014, 10 per cent of all credit-card transactions in Moneris Solutions Corp.’s network were done this way, a 200 per cent jump from 2013. MasterCard says almost all of its cards in circulation in Canada have what it takes for users to tap their card over a terminal instead of signing a receipt or inputting a security pin, and all but three of Canada’s top 30 merchants by volume have the equipment to accept a contactless payment.
In MasterCard’s Canadian network, contactless payments have almost doubled to one in four in-store sales by consumers in June, 2015, from 13 per cent in June, 2013. During its last nine quarters, MasterCard has seen its card count in Canada fluctuate between 49 and 56 million, less than five per cent of its total. Lang thinks he can use technology to persuade users to rack up bigger bills and fees in the next year or so.
“Over the next 12 to 18 months, we’re going to see a fairly significant move towards digitization,” he said.
The Purchase, N.Y.-based company has released a handful of I.T. products that try to smooth out points of friction: ShopThis! lets readers buy an item directly from a digital publication. MasterPass is a way to store card info online and proceed quicker to checkout. Pay With Rewards lets people redeem and keep track of loyalty points in real time. Qkr is a food ordering mobile platform at live events, which is used in New York City at Yankee Stadium and was also recently piloted at the Air Canada Centre in Toronto.
The assault on cash hinges on people keeping their bills in the bank and reaching for their credit cards even when they have enough money to pay for things on debit. Even as cash usage declines in Canada, a Bank of Canada spokeswoman noted in an email the value of banknotes in circulation has grown at the same rate as gross domestic product over the past 20 years.
“I don’t think too many people get up in the morning and say I cannot wait to make a payment today,” said Lang. “My guess is, that’s not really on the forefront of most minds.” But it’s on MasterCard’s.
Lang, who worked in Africa and the Middle East, praises Canada for its savvy payments network. It ranks second best in the world in MasterCard’s Mobile Payments Readiness Survey behind only Singapore. Once virtual wallets replace physical ones – and most people believe they will in due time – he predicts there will be no longer be a limit to how many credit and loyalty cards people will store in them and looks forward to that.
“I only have so many slots in my wallet today for cards,” Lang added. “If your cards are in a digital wallet, does it matter if you have five cards, 10 cards, or 20 cards?”
Financial Post
cpellegrini@nationalpost.com
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