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Coffee cups sit at a Tim Hortons in Oakville, Ont. on September 16, 2013.

CHRIS YOUNG/THE CANADIAN PRESS

When Tim Hortons rolls out a new product, it doesn't do it in half measures. And so, last month, Tim's announced that the vast majority of its 4,000-plus outlets across North America would accept payments via the chain's mobile app. To be sure, the system takes a little work: First, you must buy a prepaid Tim Card, then download the app and punch in the card's PIN. At the cash, you open the app so the cashier can scan its bar code, automatically debiting your account for the cost of a dutchie or cup of freshly brewed national identity.

"There's lots of change coming," says Gordon Phillips, Tim Hortons' vice-president of restaurant technologies. "First and foremost, Canadians are becoming more comfortable paying with their mobile phones." It's a heartening thought in a country that is so often left eating America's technological table scraps.

Cashless payments have been a long-held ambition in the tech world, and the technology has been around for more than a decade. But easy tap-to-pay has only recently–and rather suddenly–appeared at checkouts across the country, letting us siphon funds from our bank and credit card accounts just by waving a debit or credit card at a terminal, with none of the indignity of swiping, inserting, or punching in a PIN. The next step will be to connect this process to mobile phones. In concept, your phone would contain a "digital wallet" that would securely link to funds in your accounts; using these funds, you could then pay merchants by simply tapping your phone on a checkout terminal.

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Actually executing this vision is the hard part. The dream of a digital wallet has become embroiled in a clawing match not just between competing companies, but between entire industries, all hoping to be the gatekeepers between smartphone users and their money. These competitors include tech giants like Google–the companies that control the hardware and software we'd be paying with. Complicating matters, Apple has thus far refused to build the technology that would enable tap-to-pay in iPhones. This has held up the whole industry for years, even though data from IDC argues that almost 50 per cent of Android phones are so equipped. (Speculation once again suggests Apple might relent with its next iPhone model.)

But nobody wants to sit back and watch Google or Apple insert itself into every phone-based payment. So, enter everybody else, from payment processors like PayPal and Moneris, which have e-commerce in their bones, to Visa and MasterCard, the credit card duopoly that has powered so much of the digital retail economy so far (but always for a fee, which many upstarts are eager to circumvent). Then there are the telecom networks, like Bell and Rogers, whose pipes connect the data, and, looming in the background, the Big Banks.

Many of these players have launched digital wallet schemes, some in halting partnerships with one another. Rogers recently announced a deal with MasterCard, which is great–unless you're a Telus subscriber who carries a TD Visa. All of these players hold key parts of the puzzle; most would like to own the finished picture.

An interesting counterpoint to this fragmented mess is Interac, the association that put Canadian retail on the cashless path back in 1984, bringing together TD, Royal Bank, Scotiabank and Desjardins–first, to ensure that then-new ATMs worked across banks, and later to promote the use of debit. More recently, the association has helped set standards for tap-to-pay machines that work with any Canadian bank card. This co-ordination (along with the general concentration of Canada's financial sector) is one reason Canadians are already tapping their debit and credit cards, while Americans are still signing receipts.

To take the last step toward mobile payments, merchants like Tim Hortons are going it alone. The company was actually one of the first out of the gate with tap-to-pay technology–as far back as 2007, it rolled out a service for MasterCard users. Trouble is, even as of 2012, MasterCard only had about one-fifth of the Canadian credit card market. The rest of Tim's customers in Eastern Canada couldn't even use Interac to pay for their daily double-double. "In our business, every second counts," says Phillips, and waiting for people to key in their PINs holds up lines. Tim's relented in 2010, when it became clear Interac was itself moving toward tap-to-pay.

And now Tim's has introduced its bar-code-based app, a stopgap expedient on the way to wireless tap-to-pay. The trailblazer here was that other coffee company, Starbucks, which launched its low-tech, but remarkably successful, mobile payment program in 2011. It has gone a step further than Tim's, though, pairing mobile payments with a rewards program. The company says that as many as 15 per cent of its in-store purchases in Canada and the U.S. are now made through the app. Meanwhile, start-ups like Toronto's SmoothPay have sprung up to offer similar functionality to indie coffee chains.

"Behaviour will take time to change, but making small payments like buying a coffee is a good starting place where I think we will see uptake," says Krista Napier, IDC Canada's manager of mobility and consumer research. In an IDC survey from January, 12 per cent of smartphone users said they had paid for products with their phone–not bad for a technology that's still half-baked.

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