Finance Committee on March 4th, 2014

[Frank Maduri]

In terms of contactless payments, we've undergone certification. So MasterCard, Visa, and even Interac have a rigorous process to go through that.

So from a device side, whether it's us or Samsung or anyone else, they go through a horrendous—I won't go any further—process to make sure that the device can't be hacked for contactless.

As a company that also provides its back office to companies like EnStream, we haven't announced yet, but we just received Visa certification. It's just as rigorous, and PCI certification, to go through that. We're all about security. We run government email systems and whatnot, and we're very impressed by what we've seen to date. It hasn't been an easy process. It has taken us months and months to go through that. So what we're seeing in contactless, we're quite impressed.

In terms of what you're hearing in the news of the breaches and stuff like that, I'm not saying they don't happen in Canada, but a lot of them are in markets where I don't think they're as advanced as what we've done in Canada, where we offer chip and PIN.

If you look at the U.S. market with Target, there are some things that are basic in the Canadian market or the U.K. market. If you notice, a lot of the major things—Neiman Marcus—are all happening in the U.S., where they still haven't moved forward with chip and PIN.

So I'm not going to say we're not going to be attacked or whatever, but I think we've done a good job in Canada on the payment side. I think the networks have all done a good job in terms of certifying each piece of the value chain.

[The Chair, Conservative, James Rajotte]

Thank you very much. Thank you, Mr. Allen.

We'll go to Mr. Marston, please.

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

Thank you, Mr. Chair. I'm pleased to be back here, although it's temporary.

I'd like to say to you folks that I started working on mainframes for Bell in 1979. I don't know how in the world you keep up with what's happening now. Those were the days even before Windows.

You're going to hear from the government side about regulation and the problems with interference. I believe the law is for the protection of the people, so I come from that angle.

Mr. Gaetz, if I pronounce your name right—that's the guy with all of the money too, by the way. You're the chair of a task force and you recently made some recommendations to the minister in terms of actions that the government could take to become a leader in the adoption of digital payments. To your knowledge have any of these recommendations been acted on?

[Gerry Gaetz]

Gaetz is the right pronunciation. I do wish it was spelled a little differently.

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

At the bottom of your cheques, yes.

[Gerry Gaetz]

Yes, we made some recommendations and we're following closely the work that we understand is going on in the area of the reduction of cheque issuance in the government and also the move to electronic invoicing.

We believe that this is a really important initiative and a place where government can actually be out in front leading. We as an association are very supportive of it and supportive in a practical way. We've offered our help and assistance, as have many of our member financial institutions. So there's a lot of support for this.

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

That's good to hear.

[Gerry Gaetz]

It needs to keep moving.

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

Your report talks about the absence of a healthy competitive market in terms of Canada's payment systems.

Can you comment on the lack of competition and whether the credit card companies and major financial institutions are engaged in anti-competitive practices?

[Gerry Gaetz]

I can't comment on that, and I think your reference is not from the recommendations that we made because I wouldn't have been saying anything about the lack of competition.

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

I'm sorry. Our information is obviously incorrect then.

Amy ter Haar, am I close?

[Amy ter Haar]

Yes. Right on.

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

Well, that's helpful.

What are the advantages of using Flow versus the more traditional payment methods? Does Flow offer business-to-business services?

[Amy ter Haar]

Yes. It depends on the perspective because we're populating an ecosystem with both merchants and buyers and sellers. There is a different value proposition for both.

From the merchant side there are increased sales, decreased cost of sale, and a new stream of revenue that Flow offers. On the consumer side it changes a little bit. There's the difference between emerging markets and developed markets and how the consumer sees those value propositions, but in some I can say it's saving time and money. It's the loyalty, it's the value added, it's convenience, it's security, all of that value added rolled up into one.

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

Mr. Gaetz talked about the comparison of Canada to 27 other countries, even Peru and Romania.

How do you see the movement of Flow on the world stage?

[Amy ter Haar]

I see it as a global expansion. There are many jurisdictions that are already cash-based. Our system is a cash-based system, so there's a lot of reception for an online mobile methodology to accept cash and to pay with cash, not just to accept cash. In Asia you see a lot of e-commerce. There's a very well-developed market there. We see that global expansion starting in Canada and moving out.

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

I'd like to go to Mr. Maduri. We hear all of the time about BlackBerry's security and how it's pre-eminent. How much interaction is there between BlackBerry and places like Flow or other places like that? Obviously for everybody involved, security is a mainstay of what you're trying to accomplish. But how many silos are we confronted with?

[Frank Maduri]

We're very involved, actually. We spoke earlier that my company is operating the carrier joint venture infrastructure that allows you to put a payment card over the air and store it in the phone. For some banks—only one's been made public—we also run their infrastructure as well.

So Desjardins is publicly announced. For Desjardins bank we manage what they call the over-the-air personalization, which is taking a Visa or a MasterCard or what they call an Interac applet and putting it in the phone, and then afterwards taking your number and putting it in the phone. So we work closely with all of the banks, all of the carriers, and for some of the banks we run it for them, and I just mentioned one. You'll see announcements in the next month or two of other major banks that are using our infrastructure.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Marston.

We'll go to Mr. Van Kesteren.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

Thank you, Mr. Chair.

Thank you all for coming here.

Amy ter Haar, that's Dutch.

[Amy ter Haar]

It is.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

I still don't quite understand this, and I have a few quick questions. Obviously, your customers are hooked into the bank.

[Amy ter Haar]

Correct.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

So if you sign onto your program, you have to give some information, and once you're hooked up, you can now surf and find any.... Or do you provide merchants that are part of your program to your clientele?

[Amy ter Haar]

Sorry, what was the last thing?