In 2022, Canada experienced a significant surge in payment transactions, reaching a staggering $11.7 trillion, marking a remarkable 7% increase in value from the previous year1. Amid this financial landscape, a Payments Canada study unveiled intriguing trends, showcasing a notable 30% growth in credit card use and a 41% decline in cash transactions over the past five years. This blog delves into the key highlights of the study, shedding light on the evolving payment methods and their impact on the Canadian financial ecosystem.
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Credit Card Dominance: A 30% Surge and Rising
Credit Card Transactions Drive Growth: The study reveals that credit cards accounted for a significant 33% of payment volume in 2022, experiencing a 30% increase in use over the last five years². This surge is indicative of a broader trend, positioning credit card processing as a central force in Canada’s payment landscape1.
Debit Cards and EFT Trends: Debit cards followed closely, representing 31% of payment volume, while electronic funds transfer (EFT) claimed 15%. Interestingly, while total payment volume dipped by 2% over the past five years, the total payment value surged by an impressive 21%.³
Key Trends Unveiled: Online Transfers and Emerging Technologies
Online Transfer Takes the Lead: Online transfer payments witnessed a historic moment as they surpassed personal electronic funds transfer (EFT) for the first time in volume.³ The study reports 1.06 billion e-transfers in 2022, marking an 11% increase from the previous year. Interac e-Transfer emerged as the dominant force, with 61% of Canadians utilizing it for payments.
Buy Now, Pay Later (BNPL) on the Rise: The study highlights a substantial 48% increase in usage among existing Buy Now, Pay Later (BNPL) users in 2022. This growth signifies a shifting trend in consumer preferences towards more flexible payment options.
Five-Year Shift: Digital Payments Take Center Stage
Online Transfers: A 328% Growth Story: Despite a 2% decline in total payment volume over five years, online transfers exhibited a remarkable 328% growth in payment volume and a 314% surge in payment value1. This trend positions online transfers as a potential challenger to traditional cash transactions.
Credit and Prepaid Cards Lead Growth: In the card space, credit and prepaid cards emerged as frontrunners in volume growth, with a notable 23% and 19% increase, respectively1. Debit card volume also grew by a substantial 9%. However, cash and cheque transactions witnessed a decline of 59% and 45%, respectively.
Evolving Payment Innovations and Future Outlook
Digital Payments: Canadians are increasingly comfortable with digital payments, embracing frictionless experiences as the number of digital payment options continues to expand.³ Despite the decline in cash usage, 49% of consumers and 46% of businesses believe that retail outlets will be completely cashless within the next decade.
Credit Card Growth in Mobile Payments: Credit card usage is poised for further growth, especially in mobile payments and mobile commerce, with 57% of mobile wallet users utilizing their credit cards for purchases in 2022.³
Prepaid Cards: Anticipated Growth in Volume and Value: The study predicts that prepaid cards will experience the highest growth in both volume and value in the coming years. 1 This trend is attributed to increased usage among Canadian youth and the continuous evolution of the prepaid card space.
Future of Digital Payments: Real-Time Transactions on the Horizon
ISO 20022 Messages and Real-Time Rail (RTR): Payments Canada introduced ISO 20022 messages for Lynx and the upcoming Real-Time Rail (RTR) in 2022². This standard supports data-rich payments, promising enhanced and new payment experiences for Canadians.
Consumer Preferences for Real-Time Payments: Looking ahead, 65% of Canadians express interest in sending payments in real-time if the option becomes available³, with top use cases including credit card bill payments, government taxes, and rent.
As we navigate the evolving landscape of payment transactions in Canada, it’s evident that digital innovations are reshaping the way Canadians make and receive payments. With credit card processing at the forefront of this revolution, the future promises easier, smarter, and safer payment options for all Canadians.
Footnotes:
1. Newswire. (2022). Canada reaches $11.7 trillion in payment transactions in 2022, up 7% in value from 2021. Retrieved from https://www.newswire.ca/news-releases/canada-reaches-11-7-trillion-in-payment-transactions-in-2022-up-7-in-value-from-2021-894234609.html
2. Worldpay from FIS. (2022). Global Payments Report. Retrieved from Global Payments Report | FIS (fisglobal.com)
3. Bank of Canada. (2022). Methods-of-Payment Survey 2022. Retrieved from Methods-of-Payment Survey – Bank of Canada