It's been a long time coming for Canada and Apple Pay, a service first launched in the United States back in October, 2014. Canada — which is typically in the first wave of new Apple offerings — didn't get a taste of Apple Pay until 13 months later in November 2015, with its limited American Express launch. The Canadian expansion follows a period of uncertainty in the country's mobile wallet space, as the major financial institutions have been working to develop their own solutions. CIBC, Bank of Nova Scotia and Royal Bank of Canada were among the banks that were chasing after consumer digital transactions with their own apps. But their issues with Apple have now been ironed out.
According to the Financial Post, "Two major Canadian banks have signed on to Apple Pay, marking a significant expansion of the tech giant's mobile wallet service in Canada.
Starting today, debit and major credit cards issued by Royal Bank of Canada and Canadian Imperial Bank of Commerce will support the payments technology, which allows users to load cards onto their iPhones and Apple Watches and make in-store purchases using their devices.
Two other financial institutions, ATB Financial and Canadian Tire Financial Services, are also part of Tuesday's build-out, with the other three big banks rounding out Canada's Big Five expected to join in the coming months.
The involvement of the big banks marks a milestone for Apple Pay, which launched on a small scale in Canada late last year through American Express.
Jennifer Bailey, Apple's vice-president of Apple Pay, stated in an interview: "We are thrilled that seven of Canada's leading banks, including … every one of the Big Five, are are bringing Apple Pay to their customers.
Starting Tuesday, owners of the iPhone 6 and more recent models, as well as the Apple Watch, can add multiple cards from the various issuers into their digital wallet, then select which one they want to use for a particular in-store transaction. These institutions will support Apple Pay's in-app transaction functionality in June.
CIBC and RBC are supporting MasterCard, VISA and American Express credit cards as well as debit cards, while ATB's debit capability will come at a later date. Canadian Tire Financial will only support credit.
Bank of Montreal, Toronto-Dominion Bank and Bank of Nova Scotia have also agreed to support the service in the coming months, according to the tech giant, but don't have a specific launch date.
The Issues that had to be Worked Out for Canadian Banks
According to the Financial Post, "The banks, which had been in talks with Apple for months, had indicated that two issues were fundamental to any partnership with the tech giant: The need to maintain client security and to preserve client relationships.
But the financial institutions were realistic, too, recognizing the pull of a brand like Apple and realizing that they did not want to put customers in the position of having to choose between their bank and their phone.
"Adding a new network to Apple Pay's platform takes new work for both Apple and the network itself," she said. "All of the partners — the banks, Apple and the networks — have to build up this new integration and do full testing."
For the Apple Pay launch, Interac developed an Interac Token Service Provider (TSP) that generates secure tokens for transactions. The token is encrypted, meaning without the key it is meaningless to third parties.
"We have been working on it for a year and half," said Avinash Chidambaram, Interac's vice president of product and platform development. "But we have also been working with Apple to educate them on the Canadian market [and] highlight our ubiquity."
It is Interac's TSP and Apple's own encryption technology that the California-based company says makes Apple Pay one of the safest and most private ways to make transactions, particularly in a time when encryption, data leaks and privacy breaches are top of mind.
The negotiations between Apple and the banks are also understood to have involved working out how the parties would share lucrative "interchange" fees that are taken on each credit card transaction.
Bank officials would not comment Monday on the financial terms of the Apple Pay agreement.