Thank you, Mr. Chair.
It is indeed a delight to be back. It's interesting to be on this side of the table.
Hello to former colleagues, it's great to be here.
Welcome, everyone.
My name is Martha Hall Findlay. I am the chief legal officer for EnStream, a joint venture established almost a decade ago by Bell, Rogers, and Telus. You have received a more complete brief, and my remarks today are therefore summary in nature. However, I do look forward to any questions you may have.
When it was first established, EnStream's purpose was to develop the technology that would permit Canadians to make purchases using their cellphones instead of credit cards and debit cards, or cash. After significant investment and years of work, we're very happy to say that the technology works. I now buy my soup and sandwich at my local Tim Hortons with my phone—no cash, no cards, no purse, just my phone.
It is important to stress that this technology is very different from limited value prepaid cards or stored value bar code apps, such as the one you can see at Starbucks. I think most of you might have seen that. The fundamental difference between what those applications are and what EnStream is involved in now is security. When I buy my coffee with my phone, it is as secure as when I use my chip and PIN credit card, whether inserted or waved. That same credit card's credentials are simply now securely loaded into my phone.
The convenience for consumers is terrific, and the opportunities for far more than payments is exciting. It is doubly exciting—and you can forgive me a bit of nationalistic pride, but given Canada's current successes at the Olympics, we obviously can't compare—in that in this regard, mobile payments, Canada is indeed a world leader. We're already a world leader in contactless payments. We're far ahead of most other countries on this, most notably the United States, where chip and PIN and contactless payments are almost non-existent.
In Canada, 19 of the top 25 merchants, by volume, accept contactless payments—where you can wave your card over the terminal. That is 75% of our major retailers, which have 250,000 contactless payment readers already. Compare that to the fact that fewer than 2% of U.S. retailers accept contactless payment. By far the majority of credit card transactions in the United States still use the magnetic strip reader, which is far less secure. In Canada, 10% of all transactions are now contactless, and some reports have that number growing by as much as 1% a month.
The good news for all those retailers who have invested in these new terminals that already use chip and PIN and contactless is that it is those same checkout terminals that will accept payments from your phone. The level of standardization in this area in Canada is in fact very, very high. As a note, the lack of standardization in terminals is one of a variety of reasons for why things are so far behind in the United States.
Also key for the merchants is that, whether a customer uses their credit card information to pay by inserting the card or waving the card or tapping their phone, the terminal sees exactly the same credit card information.
Now, we recognize that there are concerns about the level of merchant fees associated with certain cards. I'm sure some of my other colleagues will speak to that. We understand that. But in the case of a mobile payment, what we want to stress is that the merchant fees are the same for any card, regardless of which payment method is used. The system is form-agnostic. At the Tim Hortons where I pay, the fee would be the same for that retailer whether it was inserted, waved, or I was using my phone.
It is EnStream's mobile payment technology and services, and those of our key partners, which enable financial institutions to securely download encrypted financial credential information to their customers' smartphones, in real time, over the air, through the mobile networks. This enables those customers to in turn securely use their phones to make those purchases. EnStream's technology is rapidly becoming a standard in the market for Canada, as our customers now include most of the major Canadian mobile network operators, as well as several of Canada's major financial institutions. We continue to grow.
Our business model is based on the benefits of ubiquity. EnStream's technology and services are completely open to all mobile operators and all financial institution issuers, in effect acting as a utility. The market for the technology that permits mobile payments is somewhat unique, in that all participants—financial institutions, mobile network operators, consumers, and merchants—benefit from the ubiquity and the standardization of the implementing technology, from both the deployment and cost-effectiveness perspective.
These are key reasons that Canada is so far ahead.