Canada’s big six banks are negotiating with Apple and according to the Wall Street Journal, Apple Pay is expected come to Canada in November.
For those who aren’t familiar, Canada’s big six consist of the Royal Bank of Canada, Toronto Dominion Bank, Bank of Montreal, National Bank of Canada, Canadian Imperial Bank of Commerce and the Bank of Nova Scotia.
Not wanting to comment on rumors or speculation from the media, Royal Bank of Canada stated “Apple has not yet announced plans for Apple for the Canadian Market.
Concerned about fees and security flaws, the banks have formed a consortium and hired security consultancy McKinsey & Co to develop a safe security protocol that they can leverage during their negotiations with Apple.
Over the past six months, there have been problems with security that have negatively affected US banks who rushed to roll out Apple Pay. With the rush, they were unable to negotiate any sort of fraud detection process leaving the banks at fault with a difficult situation.
In theory, Apple Pay would prevent fraud because it makes stealing credit and debit card information extremely difficult.
For every transaction, Apple tokenizes the customer’s credit card so that a merchant never actually sees any customer information. This is great for both merchants and customers alike.
The major security flaw is in the way that both Apple Pay and the US banks onboard new credit cards to the system.
The US banks allowed Apple to use Apple’s own proprietary system, which does not ask customers much beyond their basic credit card information. Information that could be used to help banks detect fraud more easily, including phone numbers or addresses is not included in their basic set up.
Because US banks didn’t scrutinize this, some too afraid that they would not be included as one of the initial issuers with Apple Pay, fraud has been difficult to manage.In addition to the missing customer information that would be helpful for banks to detect fraud, users who encountered fraudulent credit card charges with Apple Pay, were directed to a customer care centre rather than a fraud prevention centre.
The customer care centre’s actually allowed for more fraudulent cards to be approved and used with Apple Pay. Fraudsters in some cases would call the centre alerting them of a trip out of town making these fraudulent transactions look normal.
Although the US banks are responsible for all fraudulent transactions, Apple has stepped in to help work with them to deter fraud. Banks have also recently toughened standards when customers sign up with Apple Pay.
Canadian banks don’t want to make the same mistake, but security protocol isn’t all banks in Canada have to worry about.
Canadian banks are also facing a potential 15 to 25 basis point charge for every credit card transaction through Apple Pay. This is a substantially more expensive than what’s in stock for US banks, who are paying about 15 basis points per transaction.
Canadian banks also are concerned that types of services like Apple Pay lower a banks relationship with its customers as some are deploying their own.
RBC has developed it’s own mobile wallet for Android and Blackberry for its own customers. TD and Canadian Imperial Bank of Commerce have also worked to provide their customers new technology with UGO Wallet, which stores credit, debit and loyalty cards on smartphones.
Let’s hope for the best as our banks work with Apple to deploy their fantastic mobile payments technology.