43% of Canadian small businesses report sales are down - but are optimistic about outlook; 29% plan to increase employees; 27% plan to reinvest; 18% plan to expand into new markets

Despite experiencing more payment scams – 58% of small businesses feel better equipped to mitigate fraud, reveals new Payments Canada study

OTTAWA, October 20, 2021 – New data from a Payments Canada study indicates that while small businesses have faced challenging headwinds since the onset of the COVID-19 pandemic, they are optimistic about their future outlook and growth prospects.

“It has been a challenging time for many small to midsize businesses, which are critical to Canada’s economic well-being as the backbone of our economy,” said Cyrielle Chiron, Chief Strategy Officer. “Profit margins, sales, recruitment, and cash flow are just some of the headwinds that businesses have had to navigate, demonstrating incredible resilience in adapting to shifting market dynamics resulting from the pandemic. Looking to the future, new data indicates a renewed level of optimism. Many businesses are planning to reinvest and expand, leveraging payment innovation to support this growth. Businesses also have increased confidence in managing fraud and cyber scam attempts, which accelerated through the pandemic as the world became ever more digital. These are encouraging indicators for the Canadian economy.”

The new study, the Payments Behaviour Tracker - Business survey (Wave 2, 2021), explores the trends, sentiment and outlook for Canadian small businesses (total revenue of less than $10 Million) who make up 98% of all businesses in Canada. The study incorporates insights from interviews conducted in July and August 2021 through Leger’s online panel with 500 businesses.

Key Study Findings

Business headwinds through the pandemic include negative impact of sales, margins, cash flow, access to funding and recruitment

• 43 per cent of Canadian small businesses indicated that sales had worsened since the onset of COVID-19.
• 35 per cent indicated that managing margins and profit had been adversely impacted.
• When it comes to access to funding, 21 per cent reported it had worsened.
• 34 per cent report that cash flow management had been adversely impacted.
• 35 per cent of businesses reported that employee recruitment challenges had worsened.
• 26 per cent stated that currency fluctuations and foreign exchange risks had created greater challenges since the start of the COVID-19 crisis.

Canadian small businesses are optimistic about the economic outlook

• 42 per cent of Canadian small businesses believe that the Canadian economy will be in better shape 12 months from now.
• 38 per cent believe it will be the same; 20 per cent believe it will be in worse shape.

Businesses focused on future growth and expansion

• Over the next 12 months, 29 per cent of small businesses plan to increase the number of employees.
• 27 per cent plan to invest more within the business.
• 18 per cent plan to expand to new geographic markets.
• 13 per cent plan to increase expenses in general.

Embracing ways to enhance financial management

• 27 per cent of small businesses plan to reduce debt.
• 18 per cent plan to increase business savings.
• 43 per cent of small businesses plan to improve efficiency.
• 9 per cent plan to borrow more money.

Businesses believe the pandemic has accelerated payment preferences to digital and contactless

• 47 per cent of small businesses believe that customers now prefer to make payments using contactless cards, tapping debit or credit cards on a payment terminal.
• 43 per cent of small businesses believe customers prefer to make purchases using online payment methods.
• 38 per cent of small businesses believe that since the onset of the pandemic consumers prefer making payments using their digital or mobile wallet, such as Apple Pay, Google Pay or Samsung pay.

Businesses embrace payment innovation to support business growth and prosperity

• As consumer expectations and preferences continue to shift towards digital payment methods, 17 per cent of small businesses plan to accept new payment methods from customers.
• 12 per cent plan to move all or some of the business online and/ or invest in a digital platform.

Businesses report an increase in fraudulent, cyber criminal or suspicious activity

• 45 per cent report they have noticed an increase in fraudulent attempts through email since the onset of the pandemic.
• 41 per cent noticed an increase in attempts directed through text messages via smartphone or mobile device.
• 36 per cent saw an increase in fraudulent, cyber criminal or suspicious activity directed through social media platforms.
• 34 per cent reported an increase in fraudulent attempts through online retail merchant sites, e-commerce sites or apps.

Businesses feel relatively aware and confident in protecting themselves against payment scams

• 56 per cent of small businesses believe they are more aware of how to recognize payment fraud scams since the onset of the pandemic.
• 58 per cent report being more aware about how to protect against payment fraud scams.
• Even though small businesses are concerned about fraud or cyber crime, 56 per cent say it does not deter or impact their business payments behavior.
• 64 per cent of small businesses feel protected by their bank, credit union, or credit card provider when it comes to making payments, even though they know the risks around fraud and cyber crime.

Contact us for a complete version of the research report.

About Payments Canada

Payments Canada is a public purpose organization that owns and operates Canada’s payment systems, Lynx and the Automated Clearing and Settlement System (ACSS). Payments Canada is responsible for the physical infrastructure and the associated bylaws, rules, and standards that support these systems. It also has a duty to promote the efficiency, safety, and soundness of Canada’s payment systems while taking into account the interests of end users. In 2020, Payments Canada’s systems cleared and settled over $107 trillion—more than $420 billion every business day. Transactions that pass through these payment systems include debit card payments, pre-authorized debits, direct deposits, bill payments, wire payments and cheques initiated and received by Canadians and Canadian businesses. Payments Canada is working closely with the payment ecosystem to modernize Canada’s payment systems to ensure Canada and Canadian businesses remain globally competitive.

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