Canada’s payment market is rapidly digitising according to research from Technology Strategies International, the market research and industry analysis company.
In its Canadian Payments Forecast, 2024, Technology Strategies International reveals that contactless payment cards account for three-quarters of contactless payment transactions in Canada. However, smartphone and wearable payments have gained significant traction over the past few years.
At the end of 2023 there were almost 30 million smartphones in use in Canada, with 74 per cent of them being NFC-enabled. The number of in-store mobile transactions has grown by 42 per cent over the year and now represents about 23 per cent of all contactless transactions.
The value of contactless payments increased by more than $80billion over the year representing a year-on-year growth of 20 per cent.
Growth of paytech
Christie Christelis, president of Technology Strategies International
“There are a number of factors that have driven the high growth in contactless payments in Canada over the past ten years,” says Christie Christelis, president of Technology Strategies International. “Almost all debit and credit payment cards can now be used for contactless payments, and the penetration of contactless payment terminals is high among merchants.
“The increase in the contactless payment limit to $250 during COVID has allowed consumers to pay for higher ticket items without the need for PIN entry. Together these have created an environment that have allowed contactless payments to dominate transaction volumes for in-store payments.”
Christelis continues: “The ease, convenience and speed of contactless payments has had a major impact on the use of non-card form factors for payments. We have seen a huge increase in the use of wearables to make contactless payments. The use of wearables for payments is still in its infancy in Canada. Nonetheless, we have reached an inflexion point and we expect growth in wearable payments to be double that of in-store mobile payments over the next five years both in terms of value and volume of transactions.”
Deep dive into Canadian payment habits
The 140-page report provides a comprehensive review, analysis and forecast of consumer payments in Canada. The analysis draws on TSI’s annual tracking market research study of more than 2,000 adult Canadian respondents.
The report identifies high-growth segments in the Canadian payments market in the context of important recent developments in the economy, technology and the industry. Detailed forecasts are presented for credit card payments, debit card payments, cash payments, cheque payments, contactless payments, mobile payments, wearable payments, online payments, bill payments and transfers, prepaid cards, gift cards, P2P payments, international remittances, ABM installations and POS terminals.
While in-store payments account for almost 90 per cent of all consumer payments in Canada and payment cards remain the dominant form factor, mobile payments are becoming increasingly important in remote payment and money movement activities, according to the report. Mobile bill payments and transfers represented 73.5 per cent of all bill payments and transfers in 2023, with the share expected to increase to 82.1 per cent by 2028. More than 50 per cent of adult Canadians use their smartphone for online shopping.
It also found that credit card payments represented 56 per cent of all consumer payments by value in 2023 and are expected to increase to 62% by 2028. Meanwhile, the purchase and use of prepaid cards has shown strong growth over the past two years
However, online purchases are expected to grow at a slower pace after the surge experienced during the COVID-19 pandemic. Nonetheless, their impact is here to stay as the value of cash in circulation in Canada has dipped for the first time in several decades
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