Canadian Payment Trends and Predictions
The effects of the pandemic have had some obvious negative outcomes on the payments industry over the past two years. Lockdowns, reduced economic activity, travel bans and forced closures of businesses have led to sharp decreases in transaction volumes and values. But with countries opening back up and society learning to live in the new normal, what can we expect to see in 2022?
There were several common themes in all payment reports from the end of last year, reporting on payment trends throughout the pandemic:
Cash payments declined, although they are still the third most popular method of transacting. GPC’s business is built around financial technology innovation, including facilitating new payment technologies as well as supporting the needs of more traditional payment systems. History has shown that during major world events such as the current pandemic consumers revert or refocus to cash and the inherent safety of cash in your pocket so while we continue to innovate and deliver new payment technologies we also recognize now more than ever that we need to continue to support our cash and cash and cash management solutions globally.
While there has been a shift towards contactless and digital payments, pre-pandemic, this incline was fast tracked due to the circumstances surrounding the pandemic.According to the Canadian Payment Methods and Trends Report (CPMT), which defines contactless payments as contactless credit card payments, mobile payments (paying with a phone or wearable device) as well as digital or electronic payments, 43% of Canadians said that the pandemic has caused them to change their preferences to contactless and digital payments for the long term; 67% made more retail purchases online (almost double from the previous year); and 40% said they were presently uncomfortable handling cash.
Credit and debit cards remained on top as the preferred method of transacting, with credit triumphing due to various associated reward programmes.
Rewards and other incentive programmes boosted credit card popularity, despite declines in transaction volume over the previous year. Prepaid cards were popular with younger as well as unbanked Canadians. We believe there is much growth to be seen in the prepaid market, as it is being redefined as virtual prepaid products, with competitive players such as Samsung Pay, Google, Inc., Alibaba Group, Apple, Inc, and PayPal, Inc. taking stakes in this market.There is increased interest in digital currencies worldwide, though Canadians seem to remain skeptical due to concerns over security and safety, and perhaps lack of knowledge.
While about 80% of the world’s central banks are at least exploring the use of digital currencies in their respective regions - with pioneers such as the central banks in Bahamas, Eastern Caribbean and Nigeria - the US, UK and Canada are proceeding far more cautiously. As we mentioned in our last newsletter, the use of digital currencies has become an important part of the “remittances” conversation, with the ability to provide faster and cheaper means of sending money across borders. Of course, security and safety concerns are huge concerns, and as of right now, the Bank of Canada is working with other parties in assessing the varying concerns and options for a Canadian CBDC.
Meanwhile, ATMmarketplace makes its predictions for the ATM industry for 2022: Cash will continue a slow decline; global supply chain issues will continue to affect all industries including the ATM and payment industries, and future ATM needs will be between two extremes – the need for simpler, less complex machines, and the need for more complex, multi-functional machines.
With the recent announcement of the easing of travel restrictions into Canada at the end of the month, we hope to see a steeper incline in payment transactions, particularly cross border transactions. GPC remains committed to providing you with the hardware options and software capabilities you need to traverse the new payment landscape of 2022. Whether you are looking for economical and traditional cash dispensing ATMs, higher-end VTM technology with increased functionality, or specialised machines with FX capabilities, enabling customers to access up to 20 different currencies, talk to us about your needs and how we can support you.
https://www.fasken.com/en/knowledge/2021/10/payments-canada-canadian-payment-methods-and-trends-report-2021
https://www.atmmarketplace.com/blogs/examining-future-atm-trends-in-2022/
https://www.reuters.com/business/healthcare-pharmaceuticals/exclusive-canada-ease-travel-requirements-covid-cases-decline-govt-source-2022-02-15/
https://www.bloomberg.com/news/articles/2022-02-14/why-central-banks-got-serious-about-digital-money-quicktake
