To answer this question, one must first understand Rogers current forays beyond wireless into publishing, home monitoring and even payments. Only after we have a clear picture of the company's past and present, will we be able to understand where it wants to go.
What is Rogers Communications?
Rogers is Canada's largest mobile carrier, with 9.4 million mobile subscribers in the second quarter of 2013, followed by Bell and Telus, both of which have between 7 and 8 million mobile subscribers. It also operates Canadian cable TV and Internet subsidiaries. As of June 30, Rogers had about 1.9 million Internet customers and 2.2 million cable TV subscribers.In addition, Rogers Media owns Canada's largest publishing company, Rogers Publishing Limited, which has more than 70 consumer and business publications, 51 radio and television stations, including RDeals - local daily deals service that was closed earlier this year - and The Shopping Channel which is Canada's home shopping service. Rogers Media also operates the Toronto Blue Jays baseball team and holds a 50% ownership in Dome Productions, a mobile production and distribution joint venture that is a leader in high-definition television production and broadcasting in Canada.
In 2011, Rogers launched Rogers Home Monitoring, a home monitoring service which utilizes both its wireless network and cable network. Since then, Roger has also launched other digital services, such as OutRank - suite of digital marketing services to Canadian small business - and Vinicity - loyalty and marketing automation platform for small- and medium-size businesses. Also of interest is Rogers' investment in Zoove, the sole provider of StarStar numbers, an advertising service that allows businesses to send media content to consumers that dial a StarStar number. As of September of 2013, Rogers Communications, with permission from the Office of the Superintendent of Financial Institutions, also holds a banking license under the Bank Act which is primarily focused on credit, payment and charge card services. It seems that Rogers plans to launch a plastic credit card in 2014, following a pilot with a number of its customers. A mobile version should soon follow. The idea would be for Rogers credit-cardholders to accumulate loyalty points, maybe from spending on eligible Rogers services, which can then be redeemed for other Rogers services. To minimize risk, initially Rogers might only offer this card to its own customers, for whom it has an extensive history (credit history, tenure with the carrier, spending habits...), but this could change as the company gains experience and brand recognition in this new activity.
If we consider Les Riedl, senior managing partner at the U.S.-based consultancy Bank Solutions Group, comment to Mobile Payments Today on the Canadian credit card market:
"Canada is one of the most heavily 'carded' countries in the world," he said. "All the top six Canadian banks have a credit card penetration rate of at least 50 percent of their customer base, and two of them have a 60 percent penetration rate. It's difficult for a new entrant to launch credit cards in Canada, although Rogers will have the advantage of being able to target its extensive customer database."
And further take into account that there were 'roughly a dozen' other companies requesting consideration by the Office of the Superintendent of Financial Institutions to become banksat the time Rogers started the licensing process, why would a media company go into the credit card business? How does card issuance benefit Rogers more than forming partnerships with issuers? How can this step benefit Rogers ambitions in eCommerce, mCommerce, tCommerce and off-line commerce?
Rogers current forays in and around payments
Let's first review the steps that Rogers has taken so far around payments -
EnStream- A joint venture of Canada's three main telecom carriers (Rogers, BCE Inc's Bell Canada and Telus Corp) launched in 2005 to help Canadian financial institutions, telcos and merchants introduce mobile payments.
In 2009, EnStream launched Zoompass, a mobile-based, stored-value payment service with a companion contactless payment card, which was sold to Paymobile in 2012, as EnStream focused on their role as a Trusted Service Manager and provider of a common mobile commerce interface to be used by other wallets.
As stated in the company's website: 'EnStream's Secure Element (SE) management application allows safe information exchange between the Canadian mobile marketplace (carriers) and all credential issuers, whether they be banks, libraries, transit commissions, loyalty companies, or others.'
At the moment, it seems that only Desjardins Group has signed an agreement with EnStream to deliver a mobile payment solutions across Canadian wireless providers.
SureTap Service and CIBC Mobile Payment™ app - In May of 2012, Rogers and CIBC unveiled a partnershipwhere CIBC Mobile Payment app would run on Rogers' SureTap, a TSM service that allows CIBC to provision its Visa and MasterCard cards onto Rogers' SE for an annual rental fee.
Just as in the case of EnStream, Rogers’ SureTap service is eventually expected to store virtual debit cards, driver’s licences, health cards, loyalty cards, gift cards, store cards, security credentials and transit passes.
SureTap Wallet - On November 7th of this year, Rogers launched the SureTap Wallet, which will initially offer a co-branded virtual Rogers Prepaid MasterCard as well as "gift cards from select national retailers".
Little else is known about the SureTap Wallet, since although the plan was to launch it prior to the Holiday Season, and partnerships with Sequent is now public knowledge, Rogers has now officially announced that it is still in the process of testing the product and it will not be released until after the New Year.
What is clear is that longer term, Rogers would like its SureTap Wallet to be an open wallet that hosts cards from all major banks, retailers, and many other companies, along with the virtual version of its own credit card.
Rogers Bank - What is the upside?
Clearly, Rogers is interested in mobile payments, so how will the company's banking license help it get ahead in this space?
Having its own card will make Rogers less dependent on traditional card issuers, which so far have been slow to adopt digital and mobile payments solutions in general, and Rogers' and EnStream solutions in particular. Rogers customer base is larger than those of Canada's largest banks, thus giving the company quick access to over a third of the country's population.
As card issuer, Rogers will have access to additional revenues in the form of transaction fees. Given the government's push to lower the price of wireless services in Canada, which are amongst the highest in the world, telcos need to find new sources of income to compensate for potential future rate cuts.
Payment data, from transactions on Rogers and other services, will provide additional insights to use for its marketing and advertising solutions.
The wireless provider could develop a differentiated rewards program - based on mobile airtime rewards - to help it achieve top-of-wallet status in a crowded card market. In fact, if this type of rewards program is well received, it may 'force' issuers to strike partnerships with telcos to also offer airtime as part of their programs.
But the play can be much larger. As pointed out by Christie Christelis, president of the Canadian research firm Technology Strategies International, to Mobile Payments Today, Rogers may eventually offer the card to non-customers and use this new communication channel to attract them to its mobile, TV and Internet services: 'Even a 2 percent increase in mobile, TV and Internet subscribers from marketing the card would be very profitable for Rogers.'Even further, it could seamlessly integrate the SureTap Wallet into its cable TV offering, for example with The Shopping Channel or with advertising in its sports channels, to enable tCommerce and provide deep discounts or other benefits when using its credit card for purchases. This would greatly increase SureTap's number of touch-points with consumers while providing further utility for them, not to mention revenue growth for advertisers and content providers due to ease of purchase, and increased loyalty to the channels providing these services.All in all, although there are certainly many risks and unknowns around this new venture, there is also great potential upside.Note: Although not the focus of this blog, it is interesting to note that MasterCard's strategy in Canada, taking part in the Rogers wallet and other initiatives around emerging payments, resembles that of Discover in the U.S. Similarities may stem from the fact that MasterCard's penetration in Canada is relatively small, compared to the penetration MasterCard enjoys in other countries, which puts it in a similar position to Discover in the U.S.