CIBC expands its reach in mobile payments for its credit card holders

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MONTREAL – Major bank CIBC has partnered with a second major wireless carrier to give more customers the ability to make payments with their smartphones.

CIBC (TSX:CM) and Telus (TSX:T) announced on Tuesday the launch of a mobile payment app for certain models of smartphones that run on the Telus network for credit card purchases such as gas or groceries, to a limit of $50.

CIBC partnered with Rogers (TSX:RCI) in late 2012 to offer the bank’s credit card holders mobile payments with smartphones at “tap and pay” terminals across the country.

“In the next two years, by and large, you will have every bank and every major telco providing the service to clients,” said Todd Roberts, senior vice-president of payments strategy and innovation at CIBC.

“When this becomes ubiquitous, just like ATMs, like telephone banking, we will treat this as an everyday part of our lives,” Roberts said from Toronto.

For mobile payments to become widespread, smartphones need to be enabled with the technology that enables credit card purchases and also brings all wireless carriers on board.

In the case of CIBC, Roberts said that would also mean a partnership with Bell (TSX:BCE).

“It is our desire to make sure that all of our clients have our (credit) cards available for use on the network that they choose, so it is highly logical that we would enable Bell.”

He’s predicting the limit for mobile payments using Visa and MasterCard will increase to $100 as consumers and merchants get more comfortable with idea.

Roberts said debit transactions will also be coming to CIBC’s mobile payments.

CIBC won’t say how many of its customers now use mobile payments for credit card purchases.

Other banks and carriers are also getting in on mobile banking, but CIBC said it’s the only bank to partner with more than one wireless carrier.

“We’re trying to shape the pace at which this marketplace develops,” Roberts said.

Merchants such as Petro Canada, Tim Hortons (TSX:THI) and Loblaws (TSX:L) are among businesses accepting mobile payments.

Tech analyst Krista Napier said Canada’s mobile payments market is fragmented because not all smartphones are equipped for the transactions. As well, banks and wireless carriers have different offerings and not all merchants accept these payments.

“For 2014, I think it’s pretty safe to say you still have to carry around your physical wallet or some other form of payment, just in case,” said Napier, manager of mobile and consumer research at IDC Canada.

Napier said emerging countries are further ahead in mobile payments than Canada because they don’t have a traditional infrastructure for banking.

But she said mobile payments will become more common in Canada, driven by younger consumers.

Royal Bank of Canada (TSX:RY) recently announced a digital wallet that enables mobile clients to buy goods and services with their RBC Interac Debit or Visa credit cards using some models of Android smartphones running on Bell’s wireless network.

BMO (TSX:BMO) said it was the first bank to roll out mobile payments in 2011 and teamed up with MasterCard. BMO customers stick a mobile tag on their back of their smartphone and then tap the tag on the PayPass reader to pay for their purchases.

TD Bank (TSX:TD) and PC Financial have announced a mobile wallet to combine multiple payment and loyalty programs for consumers. It will allow consumers to pay, earn and redeem loyalty points in a single tap using their smartphones and is expected to launch this spring.

Mike Henry, senior vice-president of retail payments, deposits and leading at Scotiabank (TSX:BNS), said that while his bank hasn’t announced plans for mobile payments yet. the concept is under active consideration.

“Our offering is currently in pilot stage and we are currently deciding on a launch date,” Henry said.

Meanwhile, CIBC said its mobile banking app will work on the Samsung Galaxy S4, Samsung Galaxy SIII, Samsung Galaxy Note II and HTC One on the Telus network. The app will be available later this month for BlackBerry Z10, BlackBerry Q10 and BlackBerry Bold 9900 on Telus.

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