The Battle to Turn Your Phone Into a Credit Card Is Ramping Up

The great shift away from plastic begins.

| More on:
The Motley Fool

By Cameron Conway

On Nov. 7, Rogers (TSX: RCI.B, NYSE:RCI) announced that in the coming weeks it would be rolling out its new Suretap wallet, making Rogers the first Canadian wireless carrier to provide such a service.

The program will give Rogers wireless customers the ability to “tap” their phone to make everyday purchases — after some upgrading, of course.

For someone to use Suretap, in addition to the app, you’ll need a CIBC (TSX:CM) credit card (or a virtual Rogers Prepaid MasterCard), a new $12.99 suretap SIM card, and, for now at least, either a BlackBerry 9900 or a Samsung Galaxy S III. Suretap is also limited to purchases under $50, and can only be used at establishments capable of processing either Visa payWave or MasterCard PayPass.

A shift from plastic

Rogers and other companies are banking on a consumer shift away from traditional plastic and are hoping people will be comfortable using their already all-encompassing smartphones as a means of payment. The major hurdle will come in trying to assure customers of the security of this system, which has a similar risk to tap-and-pay cards/devices.

But if executed properly, this could be a move that is quite beneficial for corporate partnerships like the one between Rogers and CIBC — as long as they “get along” when it comes to fee-sharing and information storage. This also puts Rogers in an unusual position: it’s now competing with other financial institutions that are preparing to release similar apps.

Not alone

Rogers’ announcement came one day after TD Bank (TSX:TD) revealed plans of a partnership with Loblaw (TSX:L) entitled Ugo. Ugo is their version of an open wallet on your smartphone, but a key difference is that this program includes the PC Plus loyalty program in the wallet, giving customers the option to attach their PC Financial Master Card, a TD Visa, and their PC Points card to their smartphones instead of carrying them in their wallets.

One clear downside, though: like the Rogers program, some hardware upgrades are required. TD isn’t the only bank looking to move into the mobile wallets of Canadians — RBC and BMO have also begun to talk about expansion.

One sticking point in Rogers’ plan could be the willingness for merchants to once again upgrade their financial terminals to accept this new service. That’s a cost that may or not be recouped after the financial institutions collect their service fees.

A hard truth

Rogers’ success in this program hinges on retailers upgrading to accept the phones and on the customers’ willingness to use their phones instead of plastic or cash.

With the TD/Loblaw partnership, the ability to process the mobile wallet will be firmly in place and encouraged through loyalty programs. But don’t forget … Rogers is one of the “Big Three” telecoms, and it control the phones being used for these purchases. I wouldn’t bet against it.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Cameron Conway does not own shares of any companies mentioned.  The Motley Fool has no positions in the stocks mentioned above at this time.

More on Investing

Young adult woman walking up the stairs with sun sport background
Dividend Stocks

Beginning Investors: 3 TSX Stocks I’d Buy With $500 Right Now

These TSX stocks are easy to follow and high-quality companies you can commit to owning long term, making them some…

Read more »

Person holds banknotes of Canadian dollars
Dividend Stocks

TFSA Passive Income: Earn Over $600 Per Month

Here's how Canadian investors can use the TFSA to create a steady and recurring passive-income stream for life.

Read more »

grow dividends
Dividend Stocks

2 Top TSX Dividend Stocks With Huge Upside Potential

These top dividend stocks could go much higher in 2025.

Read more »

Canadian Red maple leaves seamless wallpaper pattern
Dividend Stocks

Canadian Tire is Paying $7 per Share in Dividends – Time to Buy the Stock?

Canadian Tire stock (TSX:CTC.A) has one of the best dividends in the business, with a dividend at $7 per year.…

Read more »

gaming, tech
Tech Stocks

Should You Load Up on Spotify Stock?

Spotify shares (NYSE:SPOT) surged on earnings, leaving investors to wonder whether they've missed the boat on this growth stock.

Read more »

edit Sale sign, value, discount
Investing

3 Growth Stocks Available at a Great Discount

Given their healthy long-term growth prospects and discounted stock prices, these three stocks look like appealing buys.

Read more »

Businessperson's Hand Putting Coin In Piggybank
Dividend Stocks

How to Earn $480 in Passive Income With Just $10,000 in Savings

Want to earn some passive income from your savings. Here's how to earn nearly $500 per year from a $10,000…

Read more »

money while you sleep
Investing

Where Will Fairfax Financial Stock Be in 5 Years?

Fairfax Financial Holdings (TSX:FFH) stock looks like a bargain after its latest acquisition!

Read more »