In a move to establish its foothold in the Canadian mobile-payment segment, Rogers Communications Inc. (RCI), a leading cable MSO and wireless operator in Canada, entered into an agreement with Canadian Imperial Bank of Commerce (:CIBC) for the latest banking technology. As per the agreement, if a CIBC client has Rogers’ activated smartphone, then the person will get the advantage to carry a digital wallet on his/her smartphone, through which he/she can pay online for any purchase.
If a financial transaction is over $50, the customer needs to enter his personal security code, while smaller size transactions will be authenticated within a few seconds. Although CIBC has not declared the exact date from which this service will be available, industry sources predicted that mobile-payment will start within next few months.
Globally mobile financial service has high growth potential. Various industry researches estimate that currently there are approximately 4 billion mobile phone users throughout the world but only around 1.6 billion individual bank accounts. This indicates that a large population of mobile phone users does not have access to basic financial services. Mobile-payment system is targeting to narrow this gap combining wireless handsets and secured financial services.
The mobile-banking is a rapidly growing but unsaturated market opportunity in Canada. This was primarily attributable to massive growth of smartphone, which can be used as an electronic wallet for netbanking, credit card, insurance or brokerage account information and payment. Other top-tier wireless operators in Canada, such as BCE Inc. (BCE) and Telus Corp. (TU) will follow suite in the near future.
Earlier in September 2011, Rogers Communications declared that the company is trying to diversify into mobile banking vertical. Management decided to apply to government for introducing a bank under the Canadian Bank Act. However, the company announced that if granted permission, Rogers Communications will primarily focus on online credit, payment, and charge-card services and it has no immediate plan to convert the bank into a full-service deposit taking and lending financial institution.
Currently, we have a Neutral recommendation and the company has a Zacks Rank#3 (Hold).
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