September 21, 2012 9:45 AM

Our article “Ready to go cashless?” (September 2012 issue) is a good read and asks a good question: do Canadians want to get rid of their card-stuffed wallets and embrace electronic payment systems?

I think many of us do and, as the article proves, PayPal, Rogers, MasterCard, Visa, the Canadian Bankers Association and others think so too. And in recent days, the playing field has only gotten more crowded.

Perhaps the most-recognized new player is Apple. Its Passbook app is built into the new iOS 6 and promises to store and access your boarding passes, tickets, store cards and coupons. This is a good idea, but right now it is a little unclear how many big players in Canada will sign on. Because that’s what matters: do the companies I care about support the platform you’re offering? Having said that, Apple’s obvious market clout makes Passbook a good bet.

Another new entrant is Stripe, an American company now moving its service to Canada. Founded by brothers Patrick and John Collison, former MIT and Harvard University students, Stripe promises to make it far easier for companies to accept online payments. Stripe has secured US$38 million in funding from investors including Sequoia Capital, General Catalyst, Redpoint Ventures and Andreessen Horowitz, plus PayPal founders Elon Musk, Peter Thiel and Max Levchin.

Stripe charges vendors 2.9 per cent plus $0.30 per successful transaction and does not charge setup or monthly fees

In Canada, Tarsnap, MetaLab and Shopify have been testing Stripe over the summer. (A company blog entry discusses its Canadian operation.) Tobias Lütke, CEO of Shopify, said in a statement: “The first time I dealt with online payments was when I opened my online snowboard store here in Canada. My only option was to go through my bank. It took months of pleading and convincing. By the time we could accept payments, we had spent thousands of dollars for unnecessary security audits and we were sitting on unsold inventory.

“For Canadians, [Stripe] means more choice for purchasing a variety of products and services from businesses which are now able to operate online. Americans have been enjoying Stripe for a while and I'm thrilled that it's finally available for Canadian businesses and startups.”

Groupon too is getting in on the mobile payment game. The crowd-coupon company just launched a payment service that allows retailers to accept credit card payments. The company plans to charge just 1.8 per cent for credit transactions, plus $0.15. It’s important to add, though, that so far this is a U.S.-only service and if it launches in Canada the prices may be different.

Choice and competition are good, for both innovation and consumers. But with so many payment processors and e-wallet vendors, the next 12 months will be a confusing time for anyone trying to choose the right platform. Guess wrong and you could end up paying too much to process payments for your company. Guess wrong and you could adopt an e-wallet that withers and dies from lack of partners.

So choose wisely, or wait a year and see who wins. I suggest the former option, because business opportunity rarely waits for you to catch up.

What do you think? Discuss this at our LinkedIn Group.

Blogger Profile: Peter Wolchak

Peter Wolchak has been a professional print journalist for more than a decade. Starting as a news photographer at a community newspaper, Peter then worked as a staff writer at ComputerWorld Canada, a national trade magazine, and later served as the editor of that publication for four years. Peter then moved up to the national business magazine arena as the editor of Backbone. In addition to these journalism activities, Peter has also worked as a public speaker and discussion moderator, served as a judge for the McLuhan Festival’s Vortex awards, and sits on the E-Business Program Advisory Committee at Sheridan College.

Posted by Sue Ansell at September 21, 2012 9:45 AM

Categories: eCommerce Trends

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