Canada's three main wireless carriers are planning to launch a mobile payment service on Monday, one that will allow their customers to send, request and receive money via their mobile phones.
The service, called Zoompass, will be managed by Enstream, a joint venture the three carriers first established in 2005, when it was called Wireless Payment Services, to investigate the potential of mobile commerce.
Mobile phone users with a plan with Bell, Solo, PC Mobile, Rogers, Fido or Telus will be able to register for the service online and then download the Zoompass software onto their phone. By using the software on the phone, they will be able to send, request and receive money to other mobile phones via SMS text messaging, or, if the other user is also a Zoompass account holder, via email.
Money can be drawn from an account the user sets up or from their credit card. Each withdrawal will cost 50 cents from the account, or 3.5 per cent of the transaction if from a credit card. (As a result, sending dollar amounts under $15 are actually cheaper to do using a credit card.)
Users will be able to send or receive as much as $250 and hold as much as $1,000 in their account. Confirmation receipts for transactions will also be sent by SMS. For security, the user enters a personal identification number upon launching the software and again whenever they conduct any transaction.
Money from the account can be accessed through an accompanying MasterCard equipped with a near field communication (NFC), allowing users to simply wave their phones in front of a reader to pay for items, provided the retailer is equipped to read the card.
NFC chips in use in Japan, South Korea
The venture is the first tentative step toward a true mobile wallet, where phones equipped with the NFC chips themselves could be used in everyday transactions. Such phones are already in use in countries like South Korea and Japan, but have yet to come to North America except in trials.
Robin Dua, president of Enstream, said he hopes the service's use of the NFC-enabled cards will pave the way for future adoption of NFC chip-enabled phones.
The software will work on most smartphones, including many of Research in Motion's BlackBerrys. An iPhone application is also in the works he said.
A number of different players, including credit card companies and financial institutions, have launched ventures testing NFC-chip technology in Canada. Some retailers, such as Tim Hortons, have readers equipped in some of their locations to handle these transactions.
The Royal Bank of Canada and Visa Canada tested the technology on mobile phones in an Ontario-based pilot project last year. And the Interac Association, which includes banks and credit unions, began to roll out debit cards equipped with NFC capabilities in 2008.
Analysts have suggested financial institutions, wireless carriers, handset makers and credit card companies would all need to work together to produce a truly mobile wallet.
Dua said Zoompass is a project of the carriers alone, although he said they were open to partnering with financial institutions and others in the mobile payment business in the future.
Will take some marketing: analyst
The service also faces competition from online payment companies such as PayPal, but Dua said Zoompass is distinct in that it provides a new tool for friends and family to transfer money quickly and painlessly on the spot. A group at a restaurant, for example, could have one person pay the bill and the others send him or her what they owe instead of running to a bank.
Robert Burbach, a senior financial analyst with IDC Canada, said the service might have trouble penetrating the market because of the fee structure.
"This kind of peer-to-peer service probably has some applications, but it's going to be a challenge for them to get widespread adoption," said Burbach. "I will be watching to see how Canadians react to the price point.
"The other question for Canadians, is are they going to trust the telcos to act as a bank? For this to work, there will be have to be an accompanying marketing push," said Burbach.
The service will be available on Monday on all the brands owned by the three carriers except Telus's Koodo and Bell's Virgin Mobile. But Dua said he expects Virgin Mobile will add the service after Bell completes its acquisition of the brand while Koodo will be able to add the service at a later date.
The service will not work with landline telephones, nor does Enstream have any plans to open the service to any new wireless entrants.
The three carriers and Enstream are set to announce the service on Monday at the seventh annual Canadian Telecom Summit in Toronto.