by Kristina Logue, Chief Financial Officer, Payments Canada
New technology and innovations in the payment space are transforming the way Canadian consumers and businesses make and process payments.
According to data from Payments Canada’s annual Canadian Payment Methods and Trends Report, Canadian businesses are writing fewer and fewer cheques while expanding the range of digital payment options they offer to their customers. In 2021 there were 546 million fewer cheque and paper items exchanged than in 2014, a decline of 57 per cent, while digital payment options such as credit card transactions and electronic funds transfers increased by 42 per cent.
The report also shows that businesses are actively looking to adopt new and innovative payment methods that are fast and easy to use and appeal to the ‘instant’ and ‘always on’ experiences that customers have come to expect. Similarly, our research continues to show that consumers want easier, smarter and safer ways to pay and be paid.
In line with these trends is the accelerated adoption of contactless and mobile payments, particularly growth in use of and interest in more diverse payment options like QR codes, ‘buy now, pay later’, digital currencies and biometrics. Results from Payments Canada’s latest survey shows that biometric payment methods now have wide appeal among Canadians.
So, what are biometric payments?
Biometric authentication is a way for consumers to identify themselves when making payments by using body measurements that are unique to each individual. Examples include fingerprint, palm print, voice and facial recognition. While biometric payment options are not yet considered mainstream, nearly half of Canadians (45 per cent) are open to or are already using biometric payments (23 per cent).
Canadians would be more comfortable using biometric payments than other emerging payment innovations, such as wearable devices, QR codes, social media channels, smart devices and home assistants. This level of comfort is likely due to the perceived security associated with the uniqueness and individual nature of the body measurements used as part of the biometric authentication process.
Young Canadians (aged 18-34) are significantly more likely than middle-aged (aged 35-54) and older Canadians (aged 55 and older) to find the idea of biometric payment authentication appealing (51 per cent versus 44 per cent and 43 per cent, respectively). Young Canadians in particular have expressed comfort in using biometric authentication for payments at a store (44 per cent) or merchant website (48 per cent), demonstrating much higher comfort ratings compared to older Canadians. Older Canadians are more likely (24 per cent) than middle-aged and younger Canadians not to find any appeal in biometric payments.
Interest in using biometric payment options does not only vary by age; differences can also be seen across other demographics such as gender, household income and education level.
Men are more likely than women to find biometric payment authentication appealing (51 per cent versus 40 per cent). The same is true for Canadians with higher income compared to those with lower income levels. Forty-nine per cent of Canadians with a household income of $80K or higher find biometric payment authentication appealing versus 41 per cent with a household income of less than $40K. In terms of education level, 51 per cent of Canadians with a university education find biometric payment authentication appealing versus 37 per cent with a high school education or less.
When looking specifically at the different types of biometric payment methods — fingerprint, palm print, voice and facial recognition — Canadian’s consider fingerprint scanning (27 per cent) as the most secure option for authenticating payment transactions. Fingerprint scanning is also widely considered to be more secure than chip-enabled payments. The majority of Canadians (83 per cent) most commonly use a PIN/password to authenticate their payments, however, only 37 per cent indicate this being their preferred authentication method.
We know Canadians want easier and smarter ways to pay but what remains of utmost importance to them is that their financial data remains safe and secure. Data security is the primary consideration amongst Canadians when granting merchants consent to use their biometric data. What this really means is that Canadians want to better understand how safe and secure biometric payment authentication is compared to what they’re already using (e.g., chip and PIN), how biometric authentication will protect them against payment fraud and how companies with access to their biometric data will safeguard the data they collect.
Supporting safe and secure payments remains a key priority in payments innovation. Having secure options for how people can pay is important in attracting and retaining customers. If businesses only take traditional payment methods like cash and cheques, they run the risk of eliminating a group of customers who may have been interested in making a purchase. Being able to safely expand payment options — such as having an e-commerce site or using digital payment options like biometric payments — will allow businesses to expand their customer reach and, ultimately, contribute to a resilient, inclusive and competitive economy that benefits us all.
Kristina Logue is Chief Financial Officer of Payments Canada.