Thank you, Mr. Chairman, and thank you also for inviting Flow Inc. to the committee.
Flow is a Toronto-based company that develops technology to enable people to purchase with cash online and be rewarded for doing so. Flow is not a bank. It is not a digital wallet. Flow is an independent closed-loop system compatible with Interac. Today, I'll outline how mobile payments can serve as the foundation of a business model in a closed-loop system and how Flow adds value to all constituents of the payment ecosystem.
Flow is unique and different from any other existing or emerging payment system. At Flow we believe that an emerging payment system should move beyond the mobile or digital wallet. Wallet solutions are siloed into two categories as you know: namely, hardware solutions like those provided by the credit card companies and banks; and software or cloud solutions like PayPal and Google. Presently, there are no emerging solutions that bring these sectors together into one cohesive ecosystem. Doing so is part of our goal.
In its recent research report on mobile payments, Morgan Stanley acknowledged the importance of an ecosystem approach. This approach outlines the criteria to successfully accomplish this. These criteria include the following: universal acceptance, reduction of transaction friction, protection of consumers' interests and security, driving sales with targeted marketing, and lowering merchants' cost of acceptance.
Consistent with this approach, Flow uses payments as the foundation of a new business model to achieve these five goals. The Flow system encompasses a whole value chain, but it starts with payments and flows from there. We start with mobile payments sitting at the intersection of both hardware and cloud-based technologies and we move forward from this starting point. Flow begins with a mobile application that enables people to search, shop, purchase, pay, and receive loyalty rewards. This, in turn, then enables a number of other relationships and transactions.
Once you get into the Flow stream, there are a number of other things you can do. The circular stream keeps feeding itself. Along its path it does several things. You get into it by funding it and using it to carry out transactions such as peer-to-peer or retail.
One of the things that it does, in this stream, is to give both merchants and consumers a less expensive and more secure payment alternative, providing not just an additional payment choice for consumers and merchants but also an excellent payment choice. I'm sure that we collectively agree that we need to encourage Canadian choice and Canadian solutions. We need to empower Canadian companies to compete, innovate, and succeed in the global marketplace.
We already know that increasing efficiencies in the payments space are driving costs down. In the next evolutionary phase of emerging payment systems, we need to help merchants and consumers to also benefit from these increased efficiencies. At Flow, we not only provide a method of effecting payments in an efficient manner but also add value for Canadian consumers and merchants. Flow adds value by providing a consolidated loyalty program, and this resonates with Canadians. Indeed, loyalty is a primary motivator, and this is why Canadians have so many disparate loyalty programs.
A solution like Flow gives smaller merchants the tools that larger merchants already have and the ability to present products and services to those consumers looking for them. Flow takes it to the next evolutionary stage. Rather than focusing on how one completes the payment, we need to focus on adding value for the merchant and consumer. It is security, convenience, and loyalty that add value and resonate with buyers and sellers. Existing systems are great, but not a great deal. Flow puts the merchant back into the picture.
Other emerging technologies are aimed at serving FI and consumer needs at the expense of the merchant, but at Flow, we believe we can all engage in and benefit from what we refer to as fair trade.