During the past few months, Apple has made it abundantly clear that it is ready and more than willing to invest heftily in pushing its new NFC-based payment system. The Cupertino giant has really sets its goals high with Apple Pay and despite some distrust from major retailers, as well as customers in the US, the service has been growing steadily on the home market.
Most of this success, however, can be attributed to Apple's tireless efforts to expand the service, despite numerous reports of security issues and bad user experience. Internationall expansion for Apple Pay is another move Apple has been battling for quite some time and currently, its primary target markets are Canada and China. As some of you might remember, negotiations with Chinese authorities have been pretty tough and the future is still uncertain for the payment service in the vast market.
A new report by the Wall Street Journal, however, reveals that the Cupertino giant might be pretty close to releasing Apple Pay in neighboring Canada, but there are still some tough points to negotiate. Industry sources have revealed, that Apple is currently in talks with six major Canadian bands – Royal Bank of Canada,Toronto-Dominion Bank,Bank of Nova Scotia,Bank of Montreal,Canadian Imperial Bank of Commerce and National Bank of Canada. Between them, they constitute for about 90% of all retail bank accounts, so a potential deal could insure spectacular exposure for the payment service.
This, however, does not mean that Apple Pay is in for some clear sailing in Canada, on the contrary. The aforementioned banking institutions have formed a consortium to address major issues they have with Apple's service. Unsurprisingly, the dispute revolves around pretty much the same aspect that are struggling to pass UnionPay approval in China. For one, Apple Pay hasn't proven to be particularly secure and, although cases of fraud have been few, most banks tend to show a lot of distrust towards the service.
To address this problem, McKinsey & Co has been hired as a consultant to develop a new security protocol for use with Apple Pay in Canada. And, while, this is sure to be costly and time-consuming, Apple has little choice but to comply and wait patiently, especially considering the end-reward. The Canadian market has all the characteristics to be a particularly nourishing environment for the payment service. Apple's market share in the country constitutes a whopping one third of all mobile devices and most local retailers are already equipped with the technology to accept NFC-based payments.
But even if security concerns get straightened out, there is still the question of royalties, which some sources have speculated might be even higher for retailers and banks outside the US. Ultimately, this could mean that transaction made through Apple Pay are significantly more expensive for banks than more-traditional card-based ones. And seeing how "tap-and-go" seamless card payment are already wide-spread in Canada, there is little actual incentive to favor Apple Pay, which might even require users to go through an extra verification step to address all the possible security issues.
But, needless to say, Apple has proven itself to be very persuasive and judging by the vigorous efforts to push Apple Pay, the situation might actually get sorted out sooner than we expect. All we can do is hope that the customer won’t be the one left "paying the bill" in the end.
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