What Does the Future of Payment Processing Look Like in Canada…?
A long line of people patiently wait in front of a popular coffee shop, anxious to get their morning boost of energy. Each person goes up to order and pay for their coffee and instead of pulling out their wallets to take out their change, they hold their mobile phone in front of a device, grab their drink and walk away. The line up moves at twice the speed and what used to be 2 minute interaction with the cashier is now reduced to seconds. Sounds futuristic? Not as far off as you might think.
Welcome to “INTERAC Flash Debit Cards”
This week the Royal Bank and Scotia Bank issued a joint press release announcing that in 2011, they plan to add an enhancement to consumers’ debit cards which will allow for contactless transactions. INTERAC Flash is being introduced into the market. The concept, instead of inserting or swiping the debit card and waiting to key in a PIN number, the customer simply flashes their card in front of a reader, the transaction is captured and debited from their bank account and the customer can walk away with their purchase.
But contactless transactions are not new to the market. Both MasterCard and Visa introduced their contactless product, PayPass and PayWave respectively with limited success. While these products can be found in a handful of major merchants across the country, contactless is still far from being the norm, the opposite of countries in Asia and Europe where contactless has been prevalent for several years and expected at most merchants.
Contactless Payment Solution Benefits
As a merchant, the benefits can be big. Debit transactions are historically thought to take longer than credit or cash transactions because of the need for entering a PIN number. The elimination of a PIN entry will increase the speed of thru put at the cash register which will move the customers through the line much quicker. Also, if the hypothesis that these Flash transactions will cannibalize cash transactions, it will reduce the costs associated with cash handling. It will lower the risk of fraud activity since there is no PIN number entered and therefore possibly make the merchant less of a target for compromised pinpads. Plus, it’s some pretty cool technology.
Security – How Secure is This Payment Solution?
As a consumer, the question of security will arise. If you don’t need my PIN to complete the transaction, how do I prevent someone from stealing my card and emptying my bank account? Cardholder security and fraud mitigation is top of mind for the big banks. Therefore per transaction limits will be set, likely around $50 per transaction to fall in line with the current transaction limits set by other contactless brands. Also, there will be a limit to the number of consecutive transactions allowed, meaning the card will only allow for a certain number of transaction to be processed before requiring that the next transaction be PIN authorized. And finally, INTERAC contactless transactions will follow their contact transaction counterpart in adopting the zero liability policy for their cardholders. Cardholders will be able to report lost or stolen cards to their financial institution and are offered protection against transactions they did not authorize.
So how does a merchant sign up for a INTERAC Flash processing?
The first step is to ensure your point of sale is contactless enabled. A contactless reader will be required and perhaps some upgrades to your point of sale terminal. All questions can be answered by the Acquirer.
Payment Processing in Canada will go through some major changes over the next decade. While our mobile phones are not yet contactless enabled, you can bet that it’s not far off in the future before that happens. It’s an exciting time to be invovled in payment processing!