New Mobile Pay Service Comes to Canadian Credit Unions

3 April 2016

Since Apple launched its mobile wallet in late 2014, then dubbed 2015 the “year of Apple Pay,” mobile payments have taken off. In the months that followed, companies like Google and Samsung released their own mobile payment solutions, suggesting that in time, every smartphone will sport the functionality of a credit or debit card. However, even those who own compatible smartphones have so far been limited to using cards from major banks. Now, members of Canada’s credit unions will for the first time be able to pay via smartphone, thanks to a new partnership between the Canadian Credit Union Association and Interac Flash.

The new Mobile Pay service will go online this spring, giving credit union members the ability to pay using their savings and chequing accounts at any retailer that displays the Interac Flash logo.

“The Mobile Pay service will be an easy to use, convenient method of giving credit union members the option of purchasing on the go using their supporting smartphones instead of debit cards,” said Martha Durdin, president and CEO, Canadian Credit Union Association, in a statement released by Interac. “It is also another great example of how credit unions are using technology by working with industry leaders to make financial transactions easier.”

Secure payments through tokenization

According to data collected by the Canadian Banker’s Association, 59 percent of consumers believe the ability to pay with their smartphones adds value to their banking. In an era when payment technology is shifting so quickly, ensuring the security of new payment methods is of the utmost priority. To keep its users financial data safe, the new Mobile Pay system leverages Interac’s new Token Service Provider, which masks user financial data with secure “tokens.” By using these encrypted bits of code throughout the transaction instead of consumers’ actual financial information, the TSP is able to protect users data from fraud.

This level of security is especially important when transactions involve debit accounts. When credit card fraud occurs, the unauthorized charges have a chance to sit on the consumer’s balance while he or she disputes the transaction with the credit provider. In fraud involving debit accounts, however, the funds in a consumer’s bank account could be compromised directly. This makes it inherently more risky to use debit cards or direct account payment methods online or in mobile wallets, a problem credit unions are hoping to address by using Interac’s secure TSP.

“Canadian consumers expect strong security, particularly when using debit solutions that access the money in their bank accounts,” said Mark O’Connell, president and CEO, Interac Association and Acxsys Corporation, in the statement. “By leveraging the Interac TSP with their mobile pay solution, the credit unions can offer their members peace of mind knowing that their mobile transactions are secure.”

Opening the conversation

According to Interac, the Mobile Pay service will first be available with the following credit unions: Affinity Credit Union in Saskatchewan, Conexus Credit Union in Saskatchewan, First West Credit Union in British Columbia and Meridian in Ontario. As the year goes on, more will add the service.

Adding credit unions to the conversation could have a major impact on mobile wallet adoption throughout Canada. Steve Bolton, Chair of the Credit Unions of Ontario, wrote in the Huffington Post that more than 10 million people in Canada do their banking with a community credit union – nearly one-third of the population.

While tokenization certainly provides an additional layer of security when making mobile payments, there is unfortunately no surefire way to prevent credit fraud or identity theft. To better protect your identity, consider working with a credit monitoring company. It can monitor your credit files, SSN and public records, alerting you if it detects certain activity that may indicate fraud. To learn more, contact Identity Guard Canada today.