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Apple Pay Launches In Canada With American Express

Apple Pay American ExpressApple Pay is now available to consumers in Canada. As of right now, the launch will be limited to Canadian American Express cardholders and will only work on the iPhone 6 and 6S models.

American Express said you can pay with Apple Pay at participating American Express contactless merchants, including the following stores Shell, Starbucks, Staples, Chapters, Husky, Ultramar, Rexall, London Drugs, Jean Coutu and Toronto Parking Authority Garages.

With a roster of Air Miles, Aeroplan, and Amex’s own proprietary rewards credit cards, Canadians will have the ability to continue to collect credit card rewards with their favourite loyalty programs by simply adding an American Express card to their wallet. American Express has a series of aggressive welcome bonuses with annual fee waivers to take advantage of the opportunity.

Apple, said it has partnered with 7 retailers for launch including Petro-Canada and Tim Hortons.

Apple Pay will also allow users to pay for in-app purchases, but it will be limited to iPad models with Apple’s fingerprint-sensing security.

Unfortunately, the launch will not include Visa, MasterCard or Interac, which account for 95 percent of the CanadianApple Pay American Express payments market.

However, Apple is in active negotiations with the Canadian banks to integrate their cards on to the Apply Pay platform.

According to Jennifer Bailey, Apple’s vice-president for Apple Pay, Apple is starting with American Express in Canada because it’s both the card issuer and the payment-network operator, so co-ordination is easier. With Visa and MasterCard, individual banks issue the cards, Visa and MasterCard own the settlement network, and each bank verifies customer identity differently, complicating negotiations.

Despite ongoing negotiations, it is not clear how discussions will end between Apple Pay and Canadian banks. In Australia, where the banking system is also dominated by a handful of financial institutions, the banks refused to work with Apple Pay, and cries of anti-competitive behaviour have been cast at the banks. Canadian banks, are also working on their own mobile payment platforms, and may view Apple Pay as an unwanted 3rd party influence.

American Express currently represents 5.7% of transaction volume in Canada (credit & debit), according to Nilson Reports, and currently has 4.6 million cards in market, compared to a total of 105.4 million in Canada. After losing the Costco credit card partnership, this is a much needed win for American Express.

While American Express has exceptional credit card products, it has struggled overcoming its reputation for lack of universal acceptance in Canada. However, American Express offers some of the best credit card value propositions in the country, in large part due to the higher interchange it charges merchants.

In order to use Apple Pay at participating American Express contactless merchants, you will need an iPhone 6, iPhone 6 Plus, iPhone 6s or iPhone 6s Plus running on iOS 9.0 and above, or an Apple Watch with an iPhone 5, 5c, 5s, 6, 6s, 6 Plus or 6s Plus. You will also be able to use the iPad Air 2, iPad mini 3, iPad Pro and iPad mini 4 for in-app payments.

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