Canada experiences rebound in transaction volume and value in 2021
Summary
Overall, the total payment market in Canada rebounded and grew in 2021 due to progress made in the country’s economic recovery from the pandemic. The most significant impact in the past year has been the ushering in of the “new normal,” which included the ongoing acceleration of digital payment usage. This is also reflected in the continued decline of cash usage. Cash transaction volume fell to fourth position overall in 2020 for the first time and stayed there in 2021.
Returns to pre-pandemic levels with 15% year-over-year growth in transaction value
OTTAWA, October 4, 2022 – Today, Payments Canada released its annual Canadian Payment Methods and Trends 2022 report, which analyzes 19.7 billion payment transactions made in 2021, totalling $10.8 trillion, and highlights trends that are transforming the Canadian payment landscape. The report reveals that the total Canadian payment market grew by four per cent in volume and 15% in value from 2020, representing a rebound to pre-pandemic levels.
Key study highlights:
- Pandemic changes long-term payment preferences for 43% of Canadians
- 50% of Canadians use e-commerce platforms more often than pre-pandemic
- Contactless payment transaction value increased year-over-year in 2021 by 18%
- Credit card use rebounded, increasing by six per cent
- Mobile payments volume and value each grew by 13% year-over year
- Cash and cheques declined nine per cent and six per cent respectively in volume, but increased 14% and seven per cent in value
- Online transfer transactions value exceeded debit cards for the first time ever in 2021
- Almost one quarter (22%) of Canadians are comfortable making payments using QR (quick response) codes
- 37% of Canadians are comfortable using fingerprint, facial, or voice recognition to authenticate a payment transaction
- Buy now, pay later (BNPL) is beginning to take hold with almost 1 in 10 (eight per cent) of merchants accepting BNPL and 48% of merchants interested in offering it
The new report reveals that while many payment trends remain consistent in 2021, there is continued acceleration in digital, contactless and mobile payment adoption.
“The COVID-19 pandemic has impacted how consumers and businesses make and receive payments. The increased preference for digital payments that we saw in the first year of the pandemic continued in 2021,” said Tracey Black, President and CEO of Payments Canada. “Payment volumes were uneven in 2021 due to continued lockdowns. Despite that, economic activity returned to pre-pandemic levels in Q4. Overall, the total payments market in Canada grew in 2021 driven by increased use of digital payment options.”
From a payment volume perspective, the use of credit and debit cards continued to grow and dominate the number of transactions. Cash use continued to decline, a trend that accelerated during the pandemic. Cheques account for a small fraction of the total payment volume and continued to decline. Online transfers accounted for a small percentage of total payment volume (five per cent) but usage continued to grow significantly (26% year-over-year increase and 469% increase compared to five years ago).
Additional study findings:
Contactless payments use grew: Many Canadians who switched to contactless payments for their day-to-day spending during the pandemic continued using these methods, whether due to continuing apprehensions about COVID-19 transmission or new preferences for contactless payments. Since the COVID-19 pandemic started, 43% of Canadians tapped their credit card, and 42% tapped their debit card when paying at a store, unchanged from last year.
Mobile payments continued to increase among Canadians: The increased use of mobile payments continued through 2021. Mobile payment volume and value each grew by 13% from 2020. Since the pandemic started, 45% of Canadians who used their mobile wallet to make store purchases said they were using it more than they used to.
E-commerce still appeals to Canadians despite returning to in-store shopping: Many Canadians continued using e-commerce for purchases, even after public health measures were lifted and stores reopened in 2021. The value of e-commerce sales transactions between January and March were double that for the same period in 2020 and grew by five per cent in volume year-over-year. One-half of Canadians (50%) reported using e-commerce platforms more often when compared to pre-pandemic, up from 48% in 2020. Thirty-three per cent of Canadians reported using delivery services (e.g., UberEats, Foodora, Instacart) more, up from 29% in 2020.
Businesses adapt to shifts in consumer payments preferences: More businesses built an e-commerce presence or explored ways to make the online purchase experience easier and more seamless in 2021. Fourteen per cent of businesses reported investing in a specific digital platform, up from 11% a year ago. Fourteen per cent of businesses reported accepting payments via PayPal more often, while seven per cent reported using a QR code to interact with their customers and suppliers (e.g., directing customers to a landing page/website or social media pages, providing discounts and promotional offers, reading a menu in a contactless way at restaurants), up from five per cent in 2020. Similarly, consumers became more comfortable with payment innovations that made their online purchase experience more frictionless.
“In 2021, many payment trends remained consistent including the continued demise of paper payments and the acceleration in digital payments, which now represent 86% of all transactions,” said Jon Purther, Director of Market Insights, Payments Canada. “Canadians' preference for contactless and mobile payments continues, and we are seeing increasing use and interest in more diverse payment preferences such as biometrics, wearables, QR codes, ‘buy now, pay later’, and digital currencies.”
Summary of all payment totals by volume and value of transactions in 2021 compared to 2020
The Canadian Payment Methods and Trends 2022 report was compiled by Payments Canada with the help of payment service providers, payment consultants and researchers to provide a comprehensive understanding of the Canadian payment landscape in 2021.
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