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Rogers to Offer Credit Card Service

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Recently, Rogers Communications Inc. (RCI - Free Report) , a leading Canadian telecom and cable TV operator, received an authorization from the Office of the Superintendent of Financial Institutions of Canada to start credit card service. This facility will be launched throughout Canada in 2014.

In Canada, several non-financial institutions have established their own credit card services. Retail firm Canadian Tier Corp. Ltd., grocer Loblaw Companies Ltd., and global retail giant Wal-Mart Stores Inc. (WMT - Free Report) are a few examples.

Rogers intends to initiate banking operations under the Canadian Bank Act. If successful, the company will primarily focus on credit, payment, and charge-card services and it has no immediate plan to convert the bank as a full-service deposit taking and lending financial institution. 

Rogers is trying to establish its foothold in the mobile-payment vertical. Mobile-banking is a rapidly growing market opportunity in the unsaturated Canadian market. This was primarily attributable to massive growth of smartphones, 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 - Free Report) and Telus Corp. (TU - Free Report) may follow suite in the future.

The first credit card-based mobile payment system in Canada was established in 2012 by Canadian Imperial Bank of Commerce (CIBC) and Rogers. If a CIBC customer has Rogers’ activated smartphone, then the person will be able to carry a digital wallet on his/her smartphone, through which he/she can make online payments.

If a financial transaction is over $50, the customer needs to enter his personal security code, while minor transactions are authenticated within a few seconds.

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