BMO first big bank to launch mobile payment

Bank of Montreal and MasterCard Canada launched new technology on Tuesday allowing customers to pay for transactions using a sticker attached to their mobile phones. BMO becomes the first major bank to roll out a mobile payment system.

Announced Tuesday, the Mobile PayPass Tag available to BMO MasterCard cardholders, will let users tap their phone over PayPass readers at participating merchants to make purchases under $50.

“Canadians tell us they prefer simplified, electronic payment methods. Given the prevalence of smartphones and a quickly expanding network of PayPass merchants, we think mobile PayPass is poised to take off as a popular payment method for Canadians,� Scott Lapstra, vice-president emerging payments with MasterCard Canada, said in a statement released jointly by BMO and MasterCard Tuesday.

The tags would allow consumers to leave the house without a wallet or cash on them and rack up small purchases on their credit cards using just their phones. Users will receive email verifications of their transactions.

Coming on the heels of recent “digital wallet� announcements by Visa Inc. and Google Inc., the expansion of MasterCard’s mobile payment technology is part of a growing move to cash in on consumer desire for increasingly convenient online and mobile payment options.

A Leger Marketing study conducted on behalf of PayPal Canada in June found 56% of Canadians are comfortable with the idea of never having to handle cash to make a purchase and 31% said they would find payment with a mobile phone more convenient than cash.

The new tags will use the existing PayPass technology, which BMO says is embedded in 7 million BMO MasterCard credit cards.

PayPass transactions account for nearly 10% of all MasterCard credit card transactions in Canada, according to the statement.

PayPass devices are in use at more than 19,000 merchant locations in the country, mostly in places geared to consumer convenience and quick transactions, like gas stations, quick-serve restaurants and conveniences stores.

The average PayPass transaction clocks in at just over $40 while almost half of the transactions are for purchases of $25 or less.