Industry Committee on Nov. 2nd, 2011

[Denis Blanchette, NDP, Louis-Hébert, QC]

Thank you, Mr. Chair.

My first question is for Mr. Kreviazuk.

You used a word that is central to our discussion, I believe, when you said that a new payment ecosystem has to be established. Some of the witnesses-- and I thank you all for being here, by the way--have referred to digital wallets. It seems that we have been trying to create digital wallets for several years.

Do you not believe that there could be a more centralised way to manage digital wallets? Instead of simply giving that to various retailers, various people, various groups, we could do as was done with cheques, with a clearinghouse that did not belong to anyone but still did what had to be done? What do you think of that idea?

[Doug Kreviazuk]

The marketplace in which we work today is very complex. The CPA, for example, back in the early days, worked strictly with the financial institutions, and we found that was no longer a strategy for success. We need to embrace all of the various players within the industry.

If you look at the payment value chain from the acquirers to the originators to the card issuers to the processors to the scheme operators, there are so many people involved in processing a payment today, and if you want to do it safely and efficiently, you need to involve all the parties around the table.

Do you need somebody to facilitate and to broker that? It does help. Leadership in this industry is absolutely paramount. I think Don spoke earlier about what they did with PCI compliance, and how the industry came together. That needs to happen on an ongoing basis for a number of things.

Is there one agency that can do it all? I don't know. I know the task force is looking at that, and the chair of the task force is looking at new “ecosystem”, as I term it, for the payment system, which largely involves all of the players as a self-governing organization as well as infrastructure and an oversight body.

[Denis Blanchette, NDP, Louis-Hébert, QC]

Thank you very much.

I have another concern with SMEs. At this time, it is difficult for an SME to create a website. It is even more difficult to set up an online catalog. When talking of electronic payments, we are very advanced already.

This question is for you again, Mr. Kreviazuk, but the other witnesses are also welcome to answer. How could you help small businesses to make the transition to the digital economy? I am asking this because there is currently a serious problem. Our economy now includes two separate parts: those who follow the digital trend and those who are unable to do so. I believe this is a major issue for small and medium-sized companies.

[Michael Bradley]

Thank you very much for your question.

There are a number of challenges for merchants for small businesses when they want to sell online. Certainly the scale that is present in the United States--simply because their economy is ten times bigger than ours--has enabled a very complex set of support partners to open up, allowing business to be facilitated online. I would say that probably the Canadian infrastructure--or the Canadian ecosystem, to use Doug's word--has been a little bit behind in developing the same level of players. There are players that provide shopping-cart solutions. There are players that provide encryption solutions. There are players that provide card data storage solutions and various gateways. I don't mean to get into the realm of the complex, but setting up the ability to do business online is a complex thing, and it's only getting to be more so.

We're starting to see that network of suppliers evolve. Several years ago we sponsored a book called How to Sell Online, which was a tool designed to help merchants sell online. Unfortunately a paper book is going to be outdated almost as soon as it's published, so we've now replaced that with a system of working together with a variety of the players in the system to make sure that the services continue to be robust.

It's challenging, but I think players like Visa and others, including those at this table, can play a really valuable role in helping to facilitate merchants' ability to sell online.

[The Chair, Conservative, David Sweet]

Thank you very much, Mr. Bradley and Monsieur Blanchette.

Now we go on to Mr. Braid for five minutes.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

Thank you, Mr. Chair.

I have another universal question I'd like to pose to everybody for a reply: how has each of your respective companies helped with and promoted both financial as well as digital literacy?

[Don Lebeuf]

On behalf of MasterCard, I can't say I'm intimately aware. I know we've done work with the government on literacy campaigns. I'm not really versed in those programs, but I know we have done a lot of literacy campaigns with the government.

I wish I could tell you more, but it's just out of my sphere.

[Michael Bradley]

I can speak a little for Visa. Financial literacy is a key platform for us. The ability to be able to continue to help people manage their payment choices responsibly and manage credit responsibly is critical.

We've had a program for many years called Choices and Decisions, which is a curriculum that we work through the schools in Ontario and in other provinces as well. We're certainly a big supporter of the minister's efforts to continue to make it a higher-profile issue and ensure it's embedded in the curriculum, and that Canadians, as they're starting out, get the very best education they can on their own personal debt management.

[Doug Kreviazuk]

The CPA, being in the back of the payment stream, doesn't have linkages directly to consumers. Over the past two years we've made it a priority to reach out and establish relationships with each of the major consumer groups across Canada, so much so that we formed our own council of the five major consumer groups in order to supplement our stakeholder advisory council. We meet throughout the year in order to brief them on developments within the industry, changes to policy, and changes to rules in order to engage them in this discussion and policy debate.

Also, we've made our resources available to them. If there are questions or FAQs that we could make available to them so that they can reach out to the various consumers...that would be helpful. So we do that on an ongoing basis.

[David Robinson]

As a communications services provider, we help out all of our customers when they call, to try to understand how they use our goods as we move to a mobile wallet. That becomes another service that we will support, and we will help them understand how it works and how to use it properly.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

Okay.

I have a question for Rogers as well. One of the current concerns with family cellphone plans is that you could have a teenager who, for example, gets an unexpectedly high bill because of downloading, ring tones, exceeding their text messaging, or whatever. What sort of controls or safety measures will be in place, once the new mobile wallet is in place, to deal with that sort of issue?

[Kenneth Engelhart]

I'll start with what we currently do with cellphones, and then David can talk about the mobile wallet.

We have a mobile tracker that people can have either on their computer or on their smart phone, and it will show them how many voice minutes they've used, how many SMS texts they've used, and how much data they've used, so they can monitor their plan and make sure they're not going over.

In addition, we send SMS messages out when you're at 75% of your data plan and when you're at 100%. Similarly, on the wire line Internet, we also send messages out at 75% and at 100%.

We're now doing that for data roaming as well. When you're out of the country, you will get a message telling you how much you've used, and if you use more than $50 worth, we don't let you do any more data roaming until you've bought a plan.

We're very conscious of those concerns, and we've built in a lot of systems to let people know easily how much they're using, and if they're going to go over their limit.

[David Robinson]

In the case where we're carrying banks' payment cards on our phones, all that billing information goes onto the credit card bill issued by the bank. Now, to the extent that we can assist and put in transaction alerts through the mobile phone, the smart phone can facilitate that with products offered by the payment networks that will provide visibility into where you stand on your card balance at any point in time.

In the area that I talk about, I'm not talking about putting charges on the cellphone bill. That's kind of a different area of work.

[The Chair, Conservative, David Sweet]

Thank you, Mr. Robinson and Mr. Braid.

That's all the time for that round of questioning. Now we're moving on to our third round. It, again, is five minutes.

First up for this third round is Mr. Lake, for five minutes.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

Thank you, Mr. Chair.

I just want to clarify some things from the presentation by Rogers. It's pretty complicated subject matter, I think, for people to get their heads around so that they understand how this would work practically, beyond the theoretical.

I see that you say that when you start seeing Visa or MasterCard logos on mobile devices, that logo means something. I envision that....

My BlackBerry has a Rogers logo on it right now, actually--thankfully, I guess, since you're here in front of us.

[Voices]

Oh, oh!

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

But could I have, for instance, a MasterCard BlackBerry as well? Is that...?

[David Robinson]

Let me clarify what I meant by that.

When you pull out your virtual MasterCard and present that MasterCard for the payment, if it says MasterCard on it, that means MasterCard has looked at this entire system: from the time you ask for that card to be distributed to your phone to how it gets there to how it is presented. Every piece of it has passed their certification requirements in order for us to be able to provide that logo.

That's what I meant when I said it means something.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

So it would be an app more than anything.

[David Robinson]

Yes. It wouldn't be physically printed--

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

I don't have to buy a specific MasterCard phone or a Visa phone; I actually can buy a Rogers phone and put a MasterCard or Visa app on it, as I want to.

[David Robinson]

It's a good idea, but no.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

I just wanted to make sure.

[Don Lebeuf]

They would probably charge us real estate.

[Voices]

Oh, oh!