MasterCard's support of Rogers Communications Inc.'s Suretap mobile wallet makes the emerging payments landscape in Canada a little more crowded and makes MasterCard's strategy a little more diverse.
The companies plan to offer a Rogers Prepaid MasterCard to users of the Suretap Near Field Communication-based wallet, which Rogers plans to launch by the end of this year. The wallet will rely on MasterCard's PayPass contactless payment system.
"The big wakeup call here should be for financial institutions, because it sets up Rogers and MasterCard as direct competitors for traditional payment accounts," says Richard Crone, chief executive of San Carlos, Calif.-based payments consulting firm Crone Consulting LLC.
Rogers Communications will operate as the program manager on Suretap, striking deals with merchants for private-label gift cards through the wallet while totally isolating the banks, Crone says.
Rogers plans to announce its other partners in the coming weeks. These include various virtual gift card providers as well as the issuing bank behind the MasterCard prepaid account. Though Rogers received approval in Canada recently to become the first telco to issue its own credit card, MasterCard is contractually obligated to have a sponsoring bank behind its involvement with Suretap.
The card brand views the arrangement as another commitment to work with various partners to improve payment options and security in Canada, says Nicholas Dinh, vice president of mobile products for MasterCard.
MasterCard took the conversion to EMV-chip cards in Canada over the past several years as an opportunity to "help seed the market with contactless cards and terminals," Dinh says.
In taking part in the Rogers wallet and other initiatives, MasterCard's strategy resembles that of Discover in the U.S. Last year, Discover established itself as an early partner for emerging payments initiatives such as Isis, Google Wallet and PayPal's point of sale system.
For its part, Rogers says it has worked with many players in the Canadian mobile payments ecosystem, including banks.
"Last year we launched Canada's first mobile payment solution that leverages the SIM card inside an NFC-enabled smartphone," says David Robinson, vice president of emerging business for Rogers, referring to his company's deal with major bank Canadian Imperial Bank of Commerce.
The Suretap wallet is an open mobile wallet in which consumers will have the ability to use cards from multiple banks, payment networks and other companies, Robinson says.
More than 30% of Canadian smartphone owners made a mobile payment with their smartphone in the past year, according to recent research Harris Decima provided to Rogers.
"NFC technology is definitely a part of driving this adoption," Robinson says. While it can adopt other technology in the future, Rogers is leveraging NFC as part of its long-term plan for the Suretap wallet, he adds.
Rogers is banking on many of its approximately 9 million wireless customers to adopt Suretap over time. "The Suretap wallet will be available on select devices when it launches, but any of our wireless customers could switch to an approved device to use the wallet," Robinson says.
MasterCard says its contactless technology has expanded to include 72% of Canada's top retailers, enabling consumers to tap their cards or phones more than 330 million times to make secure payments.
Still, Crone says it is hard to understand how the Rogers mobile pay initiative serves banks. "It also comes across as a last-ditch effort to save NFC," Crone adds.
"If I were a Canadian, or even a U.S. financial institution, I would be trying to leapfrog NFC and use a technology that can get to the merchants and consumers without needing the carriers to do it," Crone says.
Rogers may be hedging its bets a bit in hoping the MasterCard partnership can push Suretap to the forefront in case its offering with CIBC has slow adoption, says Brian Riley, senior research director and analyst with Boston-based CEB TowerGroup.
"Rogers is a company of note with deep penetration in Canada, and the fact that it is now a recognized card issuer in Canada also makes a big difference [in getting its mobile wallet adopted]," Riley says.
Rogers does not own a bank, so the partnership's perception as a friend or foe of banks hinges on which bank is issuing the prepaid card, Riley says.
MasterCard and Rogers announced their collaboration shortly after TD Bank Group and President's Choice Financial revealed they would launch the NFC-based Ugo mobile wallet in Canada. That initiative has the support of Loblaw Cos. Ltd., Canada's largest food retailer and the owner of PC Financial.