Mobile Payments in MotionThe world of payments is quickly changing. Last year, 3.4 million Canadians used their cellphones to

pay for goods or services1, and this number is only going to climb, says Andrew Patterson, VicePresident of Payment Software and Emerging Products at Moneris Solutions Corporation (“Moneris”).

Moneris Solutions Mobile Card Reader & Payment App

From mobile point-of-sale (POS) card readers to contactless services to cloud-based wallets, newmobile payment technologies are being developed faster than you can swipe your card. The growth ofmobile payments will have a significant impact on your business, so it’s vital to follow thesedevelopments so you’ll know how and when to make the most of them.

Payments have never changed as quickly as they are changing right now. It’s a pivotal time inour market and it will be very interesting to see how quickly things continue to change."

Andrew Patterson, Moneris Solutions

Current landscape

Today’s payment environment resembles the “Wild West” says Patterson. Canada’s banks,telecommunications companies and mobile tech innovators are scrambling to create a mobile paymentplatform that will become the industry standard, with most merchants and consumers taking a “waitand see” position. Around the globe, however, mobile payment methods have been in place for sometime. While Kenyans have long sidestepped banks and used accounts stored on their mobile phones tomake purchases and transfer money, Japanese commuters are using their smartphones to pay for trainfares.

In Canada, several technologies have established a foothold in niche markets, with no single methodacting as the forerunner. Here, we review these technologies from both the merchant and consumer

perspective to give you a clearer understanding of the mobile payment space:

The merchant - Mobile checkout

Mobile checkout, or mobile POS, is the use of a mobile device in place of a traditional POS terminal orsystem. This technology most directly affects merchants says Akhil Mittal, Director of ProductMarketing at Moneris. “Amid all the noise and hype around the mobile space,” he says, “card paymentacceptance on the mobile phone is the most relevant for merchants today.”

Mobile POS is currently available in three main formats:

Smartphone card readers - These devices enable merchants on the move to accept creditcards on their smartphone or tablet. According to Mittal, these devices are growing in popularity

in Canada, with more than 4,000 merchants2 currently using this option. The flexibility of thesedevices – which plug into the audio jack of a smartphone or tablet – allows merchants to processcard transactions wherever and whenever they do business.Dedicated mobile terminals - Mobile POS terminals aren’t new to merchants butimprovements in technology have made them faster and more efficient. They communicate usingthe same networks as mobile phones, letting them handle payments remotely, process directlyinto merchant bank accounts, and issue receipts from a built-in printer. This well-establishedoption is a popular choice for taxi drivers, bus charters, golf courses, and delivery services.Customized solutions - Some retailers are choosing to replace their traditional POS operation

entirely with a customized mobile solution, often linked to their inventory systems. Apple®

stores, for example, have equipped in-store staff with iPhones® or iPads®, enabling them toroam the aisles answering inventory questions and closing sales, which frees up space on thesales floor and improves customer service.

Mobile technology is changing the customer experience. We can expect technology to changethe way we shop and the way merchants interact with their customers."

Andrew Patterson, Moneris Solutions

The consumer - Mobile payments

Mobile payments let consumers use a mobile device to transfer funds as payment for goods or services,anywhere they take their phone. “Soon, the mobile app may replace the credit card so the app itselfbecomes the method of payment,” says Patterson. This is happening in several key ways:

Bill to mobile - With mobile billing, digital purchases appear as a charge on your mobile phonebill. This payment method is widely used for “digital goods” – such as ringtones, wallpapers, andsocial networking credits.Short Messaging Service (SMS) - SMS involves sending payment instructions via text

messaging. As with bill to mobile, SMS payments are billed to a mobile phone account, but toinitiate a purchase you need to text a special code. This method is widely used by charities andonline gaming.NFC/Contactless - A Near Field Communication (NFC) microchip in a mobile phone cantransmit credit card data (loaded onto the phone’s SIM card or via mobile app) over shortdistances. Consumers can make purchases by waving their smartphone at a merchant’s NFC-enabled digital reader – much as they would a contactless credit or debit card.

Canada’s first NFC debit purchase recently took place at a Toronto restaurant using a

BlackBerry® smartphone equipped with NFC functionality and an Interac® Flash application.

The purchase was made using funds deducted directly from the customer’s RBC® bank account.According to Interac, Canadians can expect a wider roll out of Interac’s full debit services in thecoming year.Cloud-based payments - “Cloud wallets” store personal data – payment account information,billing and shipping addresses, and more – in a secure cyberspace cloud where it can be accessedvia an application on a mobile phone whenever a purchase is made.

With cloud-based technology, both the merchant and the customer need to subscribe to thepayment application for the transaction to work – but merchants don’t have to change their POS

infrastructure. For the consumer, the experience will be similar to the PayPal™ checkout but willalso be available for making in-store purchases (by entering a PIN and receipt number into theirmobile app). Expect to see early cloud-based “wallet” options become available by 2014, saysPatterson.

Couponing potential

Both the cloud- and NFC-based payments also allow merchants to offer real-time couponing andloyalty promotions. For example, based on the individualized purchasing data both technologiesprovide, the merchant could send customers targeted offers on the spot, such as: “You’ve bought fivepairs of shoes in six months, buy a sixth pair today at 20% off or boots at 50% off.”

The changing payment landscape underscores the need for merchants to work with a trustedpartner who fully understands the marketplace."

Andrew Patterson, Moneris Solutions

Preparing for a mobile-payment future

Viewing these mobile payment developments from both a merchant and consumer perspectivehighlights the drivers behind these solutions, and helps you prepare for them. Here’s where to start:

Do your homework: “Understand your options,” advises Akhil Mittal, “and how quicklythings are changing.” Find out all you can about these new technologies, where they are beingtest-marketed and how well they are being received by industry leaders. Assess not only whethera solution would work for your business, but if it has staying power in the marketplace.Proceed cautiously: “Small businesses have finite resources to allocate to experimentation,”advises Andrew Patterson, so before making any critical business-changing decisions, researchyour options carefully. Some clear winners should begin to appear by 2014, says Patterson. Makesure any payment solution you choose – even your current one – brings you strong businessbenefits, such as faster checkout, increased sales, and better overall customer service, whileensuring security and reliability.Optimize customer touchpoints: Even if customers aren’t using their mobile devices at yourcheckout quite yet, they are likely using them to browse your inventory – or your competitor’s –at home or in-store. Make sure your website is optimized for phones and tablets or considerinstalling tablets in-store to allow customers to review your catalogue.

Still have questions? Talk to us. Moneris has a team of payment experts who are continually evaluatingthe marketplace and emerging technologies. We can help you determine what your next steps shouldbe.

Call 1-866-473-8707 or fill out an Online Sales Inquiry Form to help determine whichsolution best suits your needs.

1 - “Mobile and Alternative Payments in Canada,” Packaged Facts, 2012.2 - Based on Moneris merchants in Canada using the smartphone card reader as of April 2013® MONERIS, MONERIS & Design, and MONERIS SOLUTIONS & Design are registered trade-marksof Moneris Solutions Corporation. RBC and ROYAL BANK are registered trade-marks of Royal Bank ofCanada. INTERAC is a registered trade-mark of Interac Inc. The trade-mark BLACKBERRY is ownedby Research In Motion Limited and is registered in the United States and may be pending or registeredin other countries. Moneris Solutions Corporation is not endorsed, sponsored, affiliated with orotherwise authorized by Research In Motion. APPLE, IPAD, IPHONE are trade-marks of Apple, Inc.registered in the U.S. and other countries. PAYPAL is a trademark of PayPal, Inc. All other marks orregistered trade-marks are the marks or registered trade-marks of their respective owners.