Pandemic sparks evolutionary year for Canadian payment landscape

The Canadian payments landscape in nine facts from Payments Canada:

Electronic payments represented 79 per cent of all transactions, compared to 77 per cent in 2019 – accounting for 15.8 billion transactions and representing 66 per cent of total payments value (the combined monetary value of total transactions) in 2020.

Contactless payments grew dramatically, increasing 13 per cent in volume and 10 per cent in value year-over-year (YOY) in 2020, fuelled by Canadians’ concern about virus transmission and an increase in contactless transaction limits by most networks from $100 to $250. Debit accounted for the majority of all contactless transactions (62 per cent, up 10 percentage points from 2019) with credit accounting for the remainder.

E-commerce transactions grew by 20 per cent in value, with close to half of Canadians (47 per cent) reporting using e-commerce platforms for online purchases more frequently to purchase a wider range of products compared to pre-pandemic. E-commerce payments accounted for 477 million transactions and generated over $56 billion in value in 2020, compared to $47 billion in 2019.

Canadians’ use of card alternatives continued to grow. Use of card alternatives (such as smart watches) increased dramatically, generating $244 million in payment transactions in 2020, an increase of 115 per cent and 125 per cent in the volume and value respectively from 2019. Approximately 29 per cent of Canadians made a purchase using a mobile payment or digital wallet; 21 per cent of Canadians made in-app purchases compared to 18 per cent in 2019, and 14 per cent of Canadians made purchases using gaming consoles or Internet of Things (IoT) devices, compared to 15 per cent in 2019.

Credit card use declined for the first time in seven years, with a 11 per cent decreasein volume and an eight per cent decrease in the value of credit card transactions. This follows a record high in the use of credit cards in 2019. However, credit cards continue to represent the largest share of all payment types in terms of transaction volumes. In 2020, 93 per cent of Canadians reported owning at least one credit card, and the number of credit cards in circulation increased by three per cent overall.

Debit card use decreased nine per cent in 2020 from 2019 to represent 28 per cent of all transaction volume, but continues to be a key payment method. The vast majority of Canadians have debit cards (97 per cent) with the average transaction value being $44.

Online transfer growth skyrocketed in 2020, increasing 48 per cent in volume and 40 per cent in value from 2019 and is poised to meet or exceed debit value in the coming years. This growth follows a 40 per cent increase in the use of online transfers from 2018 to 2019, with a staggering growth of 569 per cent over the last five years.

Cash payments declined by a further 17 per cent, following a nine per cent decrease in 2019. Cash usage accounted for 17 per cent of total payments volume and is expected to continue to decline steadily. Interestingly, 47 per cent of Canadians reported making a cash purchase in the last seven days. Of those who are regular cash users, 38 per cent received a portion of their monthly work income in cash, an increase of eight per cent YOY; in part, this trend is fuelled from the growing gig economy.

Cheque use continued to decline, while average cheque transaction value increased.Cheque transaction volumes declined by 26 per cent, and transaction values by 15 per cent from 2019. But, the average cheque transaction value was $7,075 (compared to $6,142 from 2019). The year-over-year increase in average cheque transaction value is linked to the continued use of cheques for large value business payments.