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Payments Landscape in Canada: Opportunities and Risks to 2021

Payments Landscape in Canada: Opportunities and Risks to 2021


Canada is a developed and highly competitive payment card market - with pay-later and debit card penetration rates of 219.9 and 85.4 per 100 individuals in 2017. Canadian consumers are avid users of payment cards, with frequency of use at 101.2 transactions per card. While credit cards dominate in terms of spending, debit cards are more frequently used at the POS, with this figure the highest among its peers. This is largely a reflection of the continuing migration of low-value cash payments to payment cards, as well as increased usage of contactless debit cards.

Debit cards account for 34% of total payment card transaction value and 55% of transaction volume. Frequency of use of debit cards at the POS totals 181.2 transactions per card per year - the highest among its peers. Domestic debit card scheme Interac does not levy interchange fees, which has resulted in widespread adoption of debit cards in the country. To further encourage debit card use, Interac’s contactless payment service Interac Flash allows debit card holders to pay without entering a PIN for transactions under C$100 ($74.40).

Canada is poised for progress on technological fronts such as alternative payments. These form a natural extension of the established payment card infrastructure, offering speed, security, and convenience. Apple Pay entered the Canadian market in November 2015, followed by other popular payment solutions including Samsung Pay and Android Pay. International schemes are also expanding their footprints in search of a piece of this burgeoning space by launching their own solutions, including Visa Checkout and Masterpass.

Pay-later card spending outweighs debit card spending. Despite lower transaction volumes at the POS, credit cards have gained traction in terms of value, primarily because credit cards are dominant in the purchase of big-ticket items. Cashback and other rewards associated with credit cards make them the preferred choice. According to Bond Brand Loyalty’s 2016 Bond Loyalty Report, published in association with Visa, Canadian consumers belong to an average of 11.3 loyalty programs and are active in 7.3 programs.

The report Payments Landscape in Canada: Opportunities and Risks to 2021, provide top-level market analysis, information and insights into the Canadian cards and payments industry, including -

  • Current and forecast values for each market in the Canadian cards and payments industry, including debit, credit, and charge cards.
  • Detailed insights into payment instruments including credit transfers, cheques, direct debit, cash, and payment cards. It also, includes an overview of the country's key alternative payment instruments.
  • E-commerce market analysis and payment methods.
  • Analysis of various market drivers and regulations governing the Canadian cards and payments industry.
  • Detailed analysis of strategies adopted by banks and other institutions to market debit, credit, and charge cards.
Companies mentioned in this report: Royal Bank of Canada, TD Canada Trust, Canadian Imperial Bank of Commerce, Bank of Montreal, Desjardins, Visa, Mastercard, and American Express

  • To benefit from a growing preference for alternative payments, banks and payment solution providers are launching new solutions. Samsung Electronics launched Samsung Pay in partnership with Canadian Imperial Bank of Commerce (CIBC) in November 2016, initially supporting only CIBC-issued credit cards. In November 2017, the service was extended to support debit cards and credit cards from various banks. Google launched its payment solution Android Pay in Canada in May 2017, partnering with some of the country’s largest financial institutions including Bank of Montreal (BMO), CIBC, and Scotiabank.
  • Contactless payments are gaining ground in Canada due to retailers’ extensive deployment of contactless POS terminals and consumer enthusiasm for the convenience of contactless. Contactless cards have received a push from all of the major banks, including Royal Bank of Canada (RBC), BMO, CIBC, Scotiabank, and TD Canada Trust. According to Payments Canada’s Canadian Payment Methods and Trends report, contactless volumes and values increased by 81% and 78% in 2016. According to the same report, the number of contactless transactions increased significantly to almost 2.1 billion transactions: 1.1 billion using credit cards and 1 billion using debit cards.
  • The number of consumers using mobile devices to conduct banking transactions is steadily increasing. According to the Canadian Bankers Association over 200 million banking transactions were conducted using mobile devices in 2015. To benefit from the growing preference for mobile banking, Toronto-based Equitable Bank launched the digital-only EQ Bank in January 2016, while in July 2016 BMO introduced a new service that allows customers to open an account in minutes via a smartphone. The service was extended to small business owners in October 2016, enabling them to open a savings account.
Reasons to buy
  • Make strategic business decisions, using top-level historic and forecast market data, related to the Canadian cards and payments industry and each market within it.
  • Understand the key market trends and growth opportunities in the Canadian cards and payments industry.
  • Assess the competitive dynamics in the Canadian cards and payments industry.
  • Gain insights into marketing strategies used for various card types in Canada.
  • Gain insights into key regulations governing the Canadian cards and payments industry.

Market Overview
Executive Summary
Card-based Payments
E-commerce Payments
Alternative Payments
Payments Infrastructure & Regulation

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