Thank you for the opportunity to speak today. My name is Derek Colfer, and I lead Visa Canada's mobile solution development. Although I am based in Toronto, I grew up in Ottawa. It feels good to be home. Thanks for having me.
As this committee knows well, there is a great deal of interest and excitement right now around the future of mobile payments. Visa's brand is really quite well known, but the organization's core functions are less understood.
Visa is not a bank. We do not issue cards. We do not issue debit cards or credit cards. We do not make loans. We do not set interest rates or the fees associated with card usage or acceptance. What we do is facilitate commerce between millions of people, businesses, governments, and their financial institutions around the world. We do this by operating a global electronic network, called VisaNet, that connects 1.6 billion payment cards, 29 million merchants, and more than 16,000 banks in 170 countries worldwide. VisaNet is capable today of processing 47,000 transactions per second. On an average day, VisaNet sustains 300,000 cyberattacks, not one of which has ever been successful. In fact, in the five minutes' time I am making these remarks, VisaNet has the potential to process over 14 million transactions in 175 local currencies, and block over 1,000 cyberattacks.
All of these capabilities are designed to advance our goal: facilitating the flow and encouraging the growth of electronic payments. Today's topic is a key element of this broader mission as mobile payments technology becomes more and more popular. A range of different mobile payment solutions in the market are now available to consumers in Canada to make their experience more rewarding and more cost effective.
I've circulated a chart to the members, entitled “Various Mobile Payment Solutions”, that I will be referring to.
First we have mobile acceptance. This mobile payment type turns a mobile device essentially into a payment terminal. A consumer plugs an accessory into the mobile device and it allows a consumer to accept payments. The mobile device becomes a card reader. Examples of this include the Square product that is currently in the market today in Canada.
Next is app purchases. This mobile payment type is something that millions of Canadians utilize on a daily basis. Purchasing and upgrading apps is an everyday occurrence for Canadians today.
Third is mobile e-commerce. This category of mobile payment is essentially an e-commerce experience, but instead of using a desktop or a laptop, you're using your mobile device to access the Internet.
Next is non-NFC at the point of sale. These types of mobile payments allow a consumer to utilize their mobile device at the physical store to make a payment. One of the most successful examples of this in the market today is the Starbucks app, which uses QR codes.
Finally we have mobile NFC at the point of sale. These types of payments are beginning to really take off in Canada. They utilize our payWave technology and require a consumer to wave or tap their mobile device onto a payment terminal to make a payment.
I would like to expand on NFC. Visa payWave provides the foundation for NFC payments. The Visa payWave application safely transmits encrypted data through an antenna on a card or the mobile device. For Visa, payWave is payWave, regardless of whether it's on a plastic card or a mobile device. The story of the growth and consumer adoption of payWave technology in Canada is truly remarkable. The majority of Visa cards issued today are payWave-enabled, and 80% of smartphones by 2016 will be NFC-enabled as well. For merchants, the benefits of payWave can be profound. Shorter lines, improved customer experience, and greater consumer experience are particularly valuable in today's fast-paced consumer environments. For consumers, using a mobile device is faster and easier than inserting your card or entering your PIN.
Visa sometimes hears security concerns about mobile NFC payments. I would like to address these concerns today.
Visa payWave credentials are dynamic. Every time you use your card, that payment credential actually changes. They can only be used once, and they can only be used once for a merchant limit, which is usually set at between $50 and $100.
The mobile device itself never leaves a consumer's hand during the entire payWave transaction. The risk of a card being used for fraudulent transactions is greatly reduced.
The vast majority of payment applications provide the consumer with the ability to actually password-protect that payment app. The mobile device itself provides the ability to have a second layer of password protection.
Finally, all of our transactions are covered by Visa's zero liability policy. If a fraudulent transaction is made through a consumer's Visa card, the consumer will not pay for that fraudulent transaction.
It is because of these safeguards that so many consumers and merchants are excited about this technology. The facts are clear: today mobile technology defines the lifestyle of millions of Canadians. Whether it is Visa, a large chain, or a small merchant, we need to make the shift to mobile payments in line with consumers, because when consumers win, we will all benefit.
Thank you for your time, and I look forward to taking any questions you might have.