The number of contactless payments in Canada increased by 17% in 2023 to reach 68% of all in-store payments, according to the recently released Canadian Payments Forecast 2024.
The value of contactless payments increased by more than $80 billion over the year representing a year-on-year growth of 20%.
“There are a number of factors that have driven the high growth in contactless payments in Canada over the past ten years,” says Christie Christelis, President of Technology Strategies International, the report authors.
“Almost all debit and credit payment cards can now be used for contactless payments, and the penetration of contactless payment terminals is high among merchants.
The increase in the contactless payment limit to $250 during COVID has allowed consumers to pay for higher ticket items without the need for PIN entry.
Together these have created an environment that have allowed contactless payments to dominate transaction volumes for in-store payments.”
Wearables Payments Gained Traction
While contactless payment cards account for three-quarters of contactless payment transactions in Canada, smartphone and wearable payments have gained significant traction over the past few years, says the report.
At the end of 2023 there were almost 30 million smartphones in use in Canada, with 74% of them being NFC-enabled.
The number of in-store mobile transactions has grown by 42% over the year and now represents about 23% of all contactless transactions.
“The ease, convenience and speed of contactless payments has had a major impact on the use of non-card form factors for payments,” says Christelis.
“We have seen a huge increase in the use of wearables to make contactless payments. Although the use of wearables for payments is still in its infancy in Canada, we have reached an inflection point and we expect growth in wearable payments to be double that of in-store mobile payments over the next five years both in terms of value and volume of transactions.”
Payment Cards Remain Dominant
While in-store payments account for almost 90% of all consumer payments in Canada and payment cards remain the dominant form factor, mobile payments are becoming increasingly important in remote payment and money movement activities.
Mobile bill payments and transfers represented 73.5% of all bill payments and transfers in 2023, with the share expected to increase to 82.1% by 2028.
More than 50% of adult Canadians use their smartphone for online shopping.
Highlights from the study:
Credit card payments represented 56% of all consumer payments by value in 2023 and are expected to increase to 62% by 2028
The purchase and use of prepaid cards has shown strong growth over the past two years
Online purchases are expected to grow at a slower pace after the surge experienced during the COVID-19 pandemic
The value of cash in circulation in Canada has dipped for the first time in several decades
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