Apple is currently in negotiations with Canada’s six major banks about a potential November Apple Pay launch, according to a new report from The Wall Street Journal. This would mark the beginning of the expansion of the service outside of the U.S., and would be expected to enable mobile payments for both iPhone and Apple Watch users, for both credit and debit cards, according to people familiar with the matter. The banks are reportedly open to an agreement, but are balking at Apple’s current fee proposals and are wary about the security vulnerabilities that U.S. banks experienced when the service was initially rolled out last year. The six major Canadian banks – RBC, TD Canada Trust, ScotiaBank, BMO, CIBC and National Bank of Canada — together account for more than 90 percent of retail bank accounts.
Most of these banks also comprise the primary stakeholders in the Interac Association — the organization responsible for debit cards and inter-bank transaction systems in Canada. Notably, since VISA and MasterCard only provide credit card services in Canada, a Canadian Apple Pay launch would need to expand to include support for Interac Flash contactless payment standards in order to be a viable debit card solution. The banks have reportedly formed a consortium in their dealings with Apple and hired a consultancy to “help develop a security protocol for Apple Pay.” Some of the report’s sources note that the Canadian banks may require Apple Pay to incorporate a “secondary authentication” system in addition to Touch ID, perhaps requiring customers to verify their cards with a PIN or log on to a mobile banking app before cards could be used with Apple Pay. The report was unclear, however, whether this would be a per-transaction point-of-sale authentication requirement, or whether it would simply provide extra security for initially adding a card into the Apple Pay system. Contactless payment card systems are already in very widespread use within Canada, so any implementation of Apple Pay would need to provide at least as seamless an experience as using a plastic card to be practical for consumers.