Canada’s card payment market, which has been on the rise for the past few years, registered a decline of 2.8% in 2020 due to COVID-19 with reduced consumer and commercial spending. However, with the gradual recovery in economic activities, card payments are expected to rise by 6.8% to reach C$872.3bn (US$683.9bn) in 2021, according to GlobalData, a leading data, and analytics company.
Ravi Sharma, Lead Banking and Payments Analyst at GlobalData, comments: “The payment card market in Canada is mature, with each individual holding at least three cards in 2020. Canadian consumers are avid users of card payments, with high frequency of card payments (218 times per debit card in 2020), according to GlobalData.
“Persistent efforts from the country’s financial authorities and banks to ensure a robust banked population, a high level of awareness of electronic payments, and increasingly developing payment acceptance infrastructure have been successful in encouraging consumers to use electronic payment methods for day-to-day, recurring transactions. Though the COVID-19 pandemic has impacted consumer spending, it has also highlighted the importance of non-cash payment methods, pushing the use of card payments in the country.”
The outbreak of COVID-19 has resulted in a significant shift in preference for consumers towards the use of electronic payments-especially contactless payment methods. According to the results of a survey conducted by Payments Canada in November 2020, approximately 47% of Canadians surveyed report using their contactless debit and credit cards more often than pre-COVID. To encourage the shift away from cash, the contactless payment limit was increased from C$100 ($78.41) to C$250 ($196.02).
The overall decline in consumer spending was somewhat offset by a rise in online spending, as wary consumers stayed at home and used online channels for purchases. According to a study from Payments Canada dated May 2020, 28% of credit card users were using them more frequently for online payments compared to pre-pandemic levels. With credit and debit cards accounting for over one-third of total e-commerce payments, the rise in e-commerce will drive the overall card payments market. Mr Sharma adds: “Canada’s card payments market is all set to rebound and grow, with revival in economic activities, rising consumer spending and growing demand for digital payments such as contactless and e-commerce payments. Overall, the card payments market is expected to grow at a compound annual growth rate (CAGR) of 6.1% between 2020 and 2024 to reach C$1 trillion (US$811.6bn) in 2024.”