OTTAWA, ON–Evolving technology and payments innovation continues to transform the way Canadian consumers and businesses make payments, according to new data from Payments Canada’s just-released annual Canadian Payments: Methods and Trends report.
In pursuit of more convenient, faster and secure payment experiences, Canadians continue to adopt new and evolving digital payments methods and channels, including contactless, wearables, in-app payments and eCommerce.
The report analyzed the 22 billion payment transactions made in 2019, totalling CAD9.9 trillion in value. The study points to insights and trends that continue to transform the Canadian payments landscape.
“We continue to see a widespread shift away from paper-based payments, cheques and cash, as Canadians increasingly demonstrate preference for faster, easier and more secure payment experiences,” said Tracey Black, president and CEO of Payments Canada. “The migration to digital payments, a trend that we have observed for a number of years, has been accelerated by the COVID-19 pandemic. More than ever, we are seeing that Canadians’ payment preferences can be impacted by available payment options, for example, contactless payment. Innovation will continue to evolve consumer and business expectations regarding payment flexibility and efficiency.”
The key findings from the new report include:
–Electronic payments increased significantly. They now account for approximately 16.9 billion transactions, representing around 77 percent of total payments volume (number of overall payment transactions), and 62 percent of total payments value (the combined monetary value of total transactions) in 2019.
–Credit card use exceeded debit for the first time ever in 2019, growing by 16 percent in volume and 11 percent in value. Debit and credit cards continued to make up the largest portions of the total transaction volume, representing 28 percent and 31 percent respectively. The vast majority of Canadians have payment cards. About 89 percent of Canadians reported having a credit card, and 30 percent of Canadians reported that they carried a credit card balance at the end of each month. And around 94 per cent of Canadians reported having a debit card.
–Contactless payments grew dramatically increasing 15 percent in volume and 20 percent in value in 2019. About 34 percent of Canadians with a credit or debit card used contactless mobile payments on a regular basis, and 39 percent of all debit transactions were contactless.
–Online purchases were made by 86 percent of Canadians in 2019. eCommerce payments generated over CAD54 billion in value, with fashion and footwear representing over half of online purchases.
–Canadians continue to adopt new payment options. About 18 percent of Canadians made in-app purchases, and about 15 percent of them made purchases using gaming consoles or Internet of Things (IoT) devices. Wearables (for example, smart watches) are increasing in popularity, and 34 percent of Canadians who own a wearable reported using the wearable to make a purchase.
–Online transfers continued to grow in 2019, but growth is slowing. Online transfer volumes increased by 36 percent in volume and 32 percent in volume in 2019. Online transfers accounted for over 540 million transactions representing CAD178 billion in value. But the average value of an online transfer declined by about CAD10 to CAD330.
–Electronic funds transfers (EFTs) represented the largest portion of total transaction value accounting for 52 percent of total payments value in 2019. Growth in EFT value continues to be driven by business usage to support payroll, government payments and bill payments, and other use cases.
In contrast, there has been a decrease in paper-based and cash payments. Paper-based payments account for approximately 3.7 billion transactions representing 23 percent of total payments volume. But cheques and paper-based payments continued to play a significant role, accounting for 35.9 percent of total payments value. The average value of cheques increased as cheques remain an important payment option for large value corporate payments. Consumer cheques declined by about 12 percent in volume and 7 percent in value in 2019. Corporate cheque volumes declined by 15 percent, but the average value of a corporate cheque increased by about 5 percent.
However, other paper-based payment methods, cash and ABM withdrawals, accounted for only 1.5 percent of total value. Cash payments declined by 9 percent in 2019 with cash usage accounting for just less than 19 percent of total payments volume and is expected to continue to decline steadily. Interestingly, 61 percent of Canadians reported making a cash purchase in the last seven days.
The COVID-19 pandemic deeply impacted the global payments industry in early 2020, as millions of businesses and consumers shifted their payment behaviour. In particular, Payments Canada’s payment trends during COVID-19 study in 2020 indicated that the pandemic further accelerated digital and contactless payments.
Additional 2020 expected payments shifts include:
–Canadians spending less. In the first few weeks of the pandemic, 75 percent of Canadians indicated they were spending less as they stayed home, overall incomes decreased and people became more wary of their personal finances.
–Contactless payments continue to grow. Canadian consumers and businesses are expected to continue to favour contactless payment methods due to concern around transmitting the virus through surface contact. In the early months of the pandemic, 40 percent of Canadians avoided retailers that did not accept contactless payments.
–Accelerated cash use decline. Concerns of excessive surface contact through cash and coins has both merchants and consumers shifting away from regular cash usage and acceptance.
–eCommerce growth. There is an expected rise in the volume and value of eCommerce transactions as more Canadians shop from home with less brick-and-mortar shopping. Physical locations of businesses will likely pivot to eCommerce in order to meet consumer demand and reduce overall costs.
“Looking to the future, the payments landscape will continue to evolve dramatically, fuelled by new technologies, consumer demands and shifting competitive dynamics,” said Cyrielle Chiron, Payments Canada’s head of research and strategic foresight. “Beyond the continued shift toward digital and contactless payments, Payments Canada is building the foundation for the next generation of payments to ensure Canadian consumer and business needs for more control, speed, convenience and affordable payments methods are met. This includes future opportunities for innovation with the launch of Canada’s real-time rail in 2022.”