Canadians Go Digital: Simple Payment Processing Is the “New Normal”

The annual Payment Methods and Trends (CPMT) report came out last month, and it left no doubt, online transfers stole the spotlight in 2020.  Simple payment processing is the name of the game. With online transfers growing a staggering 569% over the past five years, VoPay examines the deeper story. Canadians are not simply embracing digital payments; they prefer them. The payment landscape has shifted, and consumers want faster, easier and secure ways to pay. 

How payment processing is changing

The pandemic brought digital payments to the forefront. The Payments Canada report found a significant change in payment behaviour. With social distancing in place, Canadians moved away from brick-and-mortar stores and went online. While consumer spending declined due to concerns over the global economy and job security, contactless payment solutions increased.

Three key takeaways

1. Canadians shift towards making more online purchases and using contactless and digital payments.

43% say the pandemic changed their payment preference to digital and contactless for the long-term

48% increase in the number of online transfers in 2020 (compared to 36% year-over-year growth in 2019)

2. Growth of first-time Interac e-Transfer^® users was 43% higher compared to 2019

The Pandemic accelerated the decline in cash usage.

58% used less cash in 2020, and 40% were uncomfortable touching it

16% decrease in cash transaction volumes and values compared to 2019

37% of consumers avoided businesses that didn’t accept contactless payments

3. Businesses transformed by investing in e-commerce sales platforms and accepting more digital and contactless payments.

11% of companies invested in a digital platform, either for the first time or to increase their digital presence

37% of businesses accepted payments via Interac e-Transfer more often

20% increase in online store creation compared to March 2019 

The consumer payment processing landscape

The pandemic accelerated the shift to e-commerce, digital payments and the reduction of cash usage worldwide.

In the first place, we saw the Canada Revenue Agency’s (CRA) distribute the Canada Recovery Benefit (CRB) in the safest and fastest way possible. And that way was digital. This helped Canadians become more comfortable interacting with digital payments.

Additionally, the report highlights an increased awareness and exploration of cryptocurrency. 80% of the world’s central banks are looking at the potential of digital currency. The industry is pushing forward in Open banking, digital ID and real-time payments. These initiatives continue to gain momentum worldwide.

Other notable report highlights: 

•  In response to declining cash use and the rise of digital currencies and stablecoins, The Bank of Canada (and other G7 members) continue to explore central bank digital currencies (CBDC)

• Several organizations and initiatives are advancing the case for open banking. Sometimes referred to as consumer-directed finance, such as Open Banking Initiative Canada.

• The Digital ID and Authentication Council of Canada (DIACC) released the Pan-Canadian Trust. Digital identity framework governance is developed with various industry partners, including financial institutions, businesses and government representatives.

• The Federal Retail Payments Oversight Framework (RPOF). Delayed in 2020 is now included in the recent Federal Budget. This legislation is an important step to broaden access to Canada’s core payment systems. This would be a notable benefit for Canadian pay techs and payment service providers. 

Faster, safer and more efficient  payment processing trends are here to stay

It is now confirmed that Canadians and our global counterparts prefer digital payments. It’s time for enterprises to get on board—permanently. VoPay offers three digital payment styles to suit any business need. 

EFT -  Electronic funds transfers are a safe and cost-effective way to move money between bank accounts across Canada. Businesses have an increased funding limit and can automate recurring payments. Automating payments such as monthly loan repayments saves time and money. VoPay offers same-day EFT payment solutions in Canada and the US, using Open Banking account verification technology.

Interac e-Transfer® for Business—Interac e-Transfer is Making digital payment waves for businesses in 2021. It is an account-to-account money-movement service that’s already popular with consumers. Send secure payments to multiple recipients in near real-time without the hassle of needing their banking information. It is available 24 hours, seven days a week. It is contactless, efficient, and secure.

Visa Direct—Visa Direct enables safe, convenient, and real-time push payments for Visa bank account holders across Canada. It is a low-cost alternative to cheques and credit cards, with half the administrative work and payments in real-time. You save on cost, resources, and management time so your team can focus on what matters most.

Contact us today to learn more about making the switch to digital.