Chances are you’ve seen more and more people paying for everything from coffee to hair appointments using their smartphones — a payment method called mobile contactless payments (MCPs). But have you wondered how they work, why they’re so popular and whether they could benefit your business?
Such payments require an app that stores banking information, which customers use to pay for goods and services online and in-person with their smartphone, tablet or smart watch. Point-of-sale MCPs use near-field communication technology (similar to Bluetooth) that wirelessly transfers information.
Last year, the Canadian interbank network Interac recorded a record-breaking one billion MCPs. Between August 2022 and July 2023, point-of-sale and online Interac MCPs increased by 53 and 17 per cent, respectively.
“Canadians’ reliance on mobile devices continues to increase in everyday life, and their payment habits have shifted as a result,” says Interac’s assistant vice-president of commerce Nader Henin.
COVID-19 also contributed to this shift, as the technology meant people didn’t have to touch payment terminals.
But despite their popularity, a recent Statistics Canada survey found that only 9.2 per cent of businesses accepted MCPs, due to security or privacy concerns and incompatibility with existing payment systems. However, most experts agree they’re safe; MCP apps encrypt near-field communication data, and thieves can’t pay using passcode-protected smartphones and other devices.
That said, just because MCPs are popular, doesn’t mean they’ll suit your business. Canada has a $250 MCP transaction limit, so they won’t work if you offer expensive goods or services.
But if the bulk of your business is lower-priced, online or in-person sales that people can make with tap-enabled cards, then you should give MCPs some serious thought. But don’t wait too long — a recent Payments Canada survey found that, last year, 16 per cent of Canadians avoided shopping at businesses that didn’t accept MCPs. And an Interac survey shows nearly three-quarters of Canadian businesses plan to “cheque out” in the next five years.
