CIBC has become the first of the major banks to participate in suretap, a mobile payments system backed by wireless carriers Bell, Rogers, Telus, Koodo and Virgin.
In an agreement announced Monday, the bank said it will allow consumers to store any CIBC Visa or MasterCard credit card on the suretap app so they can pay using their smartphone.
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Rogers launched the suretap app eight months ago, initially for use with a Rogers prepaid MasterCard or gift cards from a range of merchants such Swiss Chalet, Milestones Grill and Bar, Harvey's, Indigo or Ardene.
Now the telco has convinced other carriers to adopt the same app and has spun off Suretap Wallet into a separate company.
Consumers can use the app to pay for purchases of up to $100 with any Android or BlackBerry smartphone.
Todd Roberts, head of payments innovation at CIBC, said the participation of all the telcos in a single system was significant in CIBC's choice to go with suretap.
"The customer doesn't have to worry about whether it's Rogers and Telus," he said.
Mobile payments tipping point
Roberts anticipates a tipping point in which an increasing amount of payment will be performed through mobile and says CIBC will continue to evaluate new mobile systems as they move into the market.
"Our objective is to make sure that we are providing our clients with choice," he said.
CIBC launched a mobile banking app in 2010 and its own branded mobile payments app in 2012.
Jeppe Dorff, president of Suretap, said the app uses the point-of-sale infrastructure already adopted by many large Canadian retailers such as Loblaws, Starbucks and Tim Hortons.
"About 35 per cent of all retailers in Canada have this infrastructure in place which represents the largest portion of all transactions today so it should not be an issue for a consumer to be actually to use this anywhere they go today," he said.
Dorff anticipates further deals with other Canadian banks later in the year.
"The approach we have taken is whatever you have in your physical wallet today we're going to replicate that in a virtual world," Dorff said.
He wouldn't say how many users suretap has, but said it has some promotions planned to attract smartphone-loving Millennials.
The mobile payments marketplace is becoming increasingly crowded, with multiple apps available and the potential dominant force, Apple Pay, still to come in Canada.
For merchants and consumers, there is a confusing array of options — should they opt for one of the apps now on the market or wait until there is a clear leader that is widely accepted.
Suretap is passcode protected with encryption technology,which Roberts says is the same as the security on any credit card.
Robert Smythe, a mobile payments specialist at IDC, says mobile payment won't really explode until it is combined with loyalty programs.
"Why would I use my phone instead of plastic, there's got to be a reason? And the reason is phones will allow you to integrate loyalty payments with your mobile payment process. Then you've got something worthwhile," he said.
"So when you go to a store and they ask you for a loyalty card and you say on 'I forgot it at home,' in this case that's taken care of because the points card is going to be integrated with the payment process."