Finance Committee on Feb. 13th, 2014

[Derek Colfer]

Those terminals accept multiple....

A lot of merchants have recently deployed contactless. Contactless is an umbrella term that means Interac Flash; it means Mastercard PayPass, and it means Visa payWave. All of those are contactless. Terminals will accept all three, if that merchant chooses to accept all three.

[Glenn Thibeault, NDP, Sudbury, ON]

Ms. Burke.

[Carolyn Burke]

We're indifferent as to what the merchant has. Most merchants have contactless. Some have QR, and some have other methodologies. A secure cloud works with all of them.

I will say, Mr. Thibeault, that many merchant acquirers, including this country's largest, do provide a flat rate to merchants for all cards, in the same way that PayPal does. This is not unique for small merchants; they do blend the rates for very small volumes.

[Glenn Thibeault, NDP, Sudbury, ON]

You hear more and more small-business owners talking about PayPal and other organizations, even Square, for example, because they cannot guarantee what their bill is going to be at the end of the month. When you have premium cards that have different interchange rates, there is no way for the small-business owner to figure out how much they actually paid at the end of the month. The payment is taken out even before they can question it.

This whole system needs to be looked at, to ensure we're bringing this forward on behalf of small business. As consumers, we're the ones who end up paying these prices.

You were talking earlier, Ms. Burke, about the Competition Tribunal allowing for the moving forward of honouring all cards. That's not entirely accurate. What they said after they made their ruling on July 23, 2013, is that there are anti-competitive practices in place, and they've punted it back to Parliament to make a decision on it.

Small and medium-sized enterprises are looking for change. I think the opportunity for mobile payments presents that, but if we don't allow for that change, it's going to continue to skyrocket the costs.

[The Chair, Conservative, James Rajotte]

Okay.

Ms. Burke, a brief response, please.

[Carolyn Burke]

We believe that the system has to be balanced and respectful of the needs of merchants as well as consumers in order to work. We don't want to see small businesses' interchange rates spiral. We want to keep them affordable for them. This is evidence of one of the things that we are doing.

I will say, though, that there are many acquirers that offer a flat rate that is independent of card type, even though in the background those rate types are very different. Those packages are available.

[The Chair, Conservative, James Rajotte]

Thank you.

Thank you, Mr. Thibeault.

I'm going to take the next round as the chair.

I'm going to come back to the theme of ubiquity and standardization, which Ms. Hall Findlay broached. I think most of you are probably familiar with the famous Seinfeld episode, where George Costanza has the big wallet with 1,000 cards.

Ms. Burke, in the RBC presentation, you showed us how you have three cards. You have the RBC client card; Visa Infinite Avion; and you have Target, so you have a store card within the secure cloud.

How far are we from the situation whereby every card, such as Shoppers Drug Mart, would be able to be stored in the cloud?

[Carolyn Burke]

We are not very far at all. In fact, what you don't see behind that are loyalty points. For example, RBC Avion loyalty points are part of the card offering that is in there, so it doesn't take very much to extend it to Shoppers, to other programs. It's virtual.

We've shown you those three cards because they are the ones most typically carried by consumers today in Canada.

[William Giles]

I'll weigh in, if you don't mind. The demo that Nicolas Dinh and our team has brought in today demonstrates loyalty, couponing, and payment, all in one tap. You can see it live at the back of the room later.

[The Chair, Conservative, James Rajotte]

Mr. Schmidt.

[Cameron Schmidt]

I was just going to say that PayPal enables the same thing. Any nature of cards—

[The Chair, Conservative, James Rajotte]

And you're all in very active discussions with the various retailers to do this.

[Cameron Schmidt]

Absolutely.

[The Chair, Conservative, James Rajotte]

Ms. Hall Findlay.

[Martha Hall Findlay]

I think it is helpful to understand that the RBC solution for having its credentials residing in the cloud is terrific. However, that's not all of the solutions. I think you might have been asking about the ability to have all of these different card capabilities in one place. That is what we call the wallet capability that is on the phone, and I think Rogers is going to be appearing at a future date.

There are two types of wallet; one is the simple piece that we have right now. I have a CIBC mobile payment app on my phone, but it's just CIBC. The real wallets, the open wallets, will be the ones that allow for all of those cards, coupons, gift cards. That is the really exciting part, from a consumer perspective, because that's where you have the ability to use.... You'll see a demonstration on that.

There are two wallets that are very close to commercialization in Canada. One is the Suretap one, which has been worked on to date by Rogers. It's very exciting. Another one that was announced a while ago by TD and PC bank is called Ugo. Those are examples of the full open wallet that provides the capability that I think you were asking about.

[The Chair, Conservative, James Rajotte]

Yes, exactly. Thank you very much for that.

I want to then move to the second topic I wanted to raise, which is the cloud technology.

PayPal, your information is stored in the cloud as well. Maybe I'll use the RBC example. If I tap to pay, the information is sent. It's not stored on my BlackBerry, the information is stored in the cloud. But during that transmission is there any concern?

We're always told to hide our PIN, that during the actual transaction itself, in terms of using a debit or credit card, that's actually the most concerning time with respect to someone taking that personal information, stealing someone's personal identity in that way. During the transmission from here to getting the information from the cloud, are there any security concerns that the committee should be aware of?

[Carolyn Burke]

Absolutely not. In fact, if there were any at all, we would not have launched. Safety and security is first, followed by choice and ease of use.

[The Chair, Conservative, James Rajotte]

Okay.

Mr. Schmidt, do you want to comment on that?

[Cameron Schmidt]

I'm not a technology person, so we can give you details on all of that, but, essentially, there is no issue there.

[The Chair, Conservative, James Rajotte]

So when someone's actually paying for something and the information is being transmitted, there's no concern whatsoever of that information, while it's being transmitted, being stolen?

[William Giles]

SIr, can I weigh in a little on how the technology works?

[The Chair, Conservative, James Rajotte]

Sure.

[William Giles]

The information is travelling from a secure location, in the case of EnStream it's the SIM in the card to the point-of-sale terminal, and then it travels through the normal channels that every card transaction travels through from there.

[The Chair, Conservative, James Rajotte]

My final question—I only have 30 seconds—follows up on Mr. Van Kesteren's point. If I lose my BlackBerry, which I have in the past, I actually phone my office from someone else's BlackBerry and say, tell the House of Commons I've lost my BlackBerry. They sell what's known as a “kill pill” and they kill any and all information, any and all connection. So there's no way, at least they tell us, they can get any James Rajotte information from that BlackBerry that's lost somewhere. My impression is that would be the exact same thing that would happen if I lost my BlackBerry with the SIM card with the basic information. Does anyone want to address that?

[Cameron Schmidt]

In the case of PayPal, there's nothing stored on the phone at all.