TD Bank Group and President’s Choice Financial are launching the Near Field Communication-based Ugo mobile wallet in Canada.

Loblaw Cos. Ltd., Canada's largest food retailer and the owner of PC Financial, is on board to accept the new payment method.

“The Canadian market is more conducive for an effort such as Ugo because it is so much more concentrated than the U.S. market with far fewer banks and large retailers,” says Gil Luria, an analyst at Wedbush Securities. “Even if three to four big Canadian banks cooperate on this platform it could get broad adoption.”

Loblaw is tying its PC Plus loyalty program to the wallet, which sends targeted offers to customers and allows them to earn points to use towards their grocery bill. Rewards and discounts will be automatically applied when consumers tap a smartphone to pay at the point of sale.

Ugo will be available commercially next spring to consumers using Blackberry and Android mobile devices that support NFC, with plans for other handsets in the future.

Initially, Canadian consumers will be able to load a TD Visa, President’s Choice Financial MasterCard or PC Plus card into the mobile wallet. Consumers will be able to use the mobile wallet at any Visa payWave or MasterCard PayPass point of sale. Before the wallet commercially launches, the venture plans to add more credit and debit capabilities, partners and loyalty programs.

Canada is well-prepared for a shift to mobile NFC payments as it continues to build out its contactless payments infrastructure. Many companies are moving into the Canadian market, cashing in on the country’s mobile preparedness.

McDonald’s tested mobile debit payments at its restaurants in Canada in 2012 and said the pilots were successful enough to justify expanding the program. In August, Desjardins Group, a Quebec-based cooperative financial institution, partnered with Monitise plc to support a mobile payment application for Desjardin’s NFC system.

But so far, most mobile payments initiatives in Canada haven’t been launched by banks.

“Banks are very well positioned in the mobile wallet race because they have customers and they have their trust,” Luria says. “The challenge for bank wallets will be to keep up with the technology innovation that will come from the likes of Google Wallet and PayPal.”

PayPal Canada is working with with TouchBistro on a photo-based mobile payment method.

TD, PC Financial and Loblaw did not provide an executive for an interview by deadline.

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