Nostalgia. It tends to sneak in around the holidays. The end of 2021 has us taking stock and completing a year-end review. It’s a time to contrast, compare, and question. What happened in the world of digital payments in 2021? How does that correspond to the year before? What can we expect in 2022? There is something to be said about starting a new year afresh. Sometimes looking back is what can help guide our path forward.
Our final blog of 2021 is the first of a 2 part series, payments past, present, and future. In this article, we scan the past, examine the present and discuss the changes payments have seen along the way. It is these reflections that help us discover what lies ahead. As payments-as-a-service (PaaS) continues to gain traction, our payments look forward, launching early 2022 will present how we expect the payment industry changes will unfold in the new year and beyond (stay tuned for part 2).
No matter how far back you go in history, it is easy to see humans are always looking for a better, faster and easier way to pay and get paid. Whether the currency was gold, paper, or plastic, payment methods have evolved, moulding themselves to present-day customer expectations.
Now more than ever, the world is running on digital currency. If we thought the payment industry was evolving pre-pandemic, the period from 2020 to the end of this year has only propelled the entire ecosystem light years ahead. Be it B2C or B2B, people and businesses expect a fluid and simple payment experience. The pandemic has forever altered the payment landscape.
How digital payments took shape in 2021
Cheques fast fall out of favour as electronic funds transfer (EFT payments) take center stage. They may be one of the oldest payment methods in the modern era, but their relevance in the payment ecosystem is on a downward spiral. Personal cheques were down 28% from 2020, a number expected to double in 2021. Times they are a-changing, next-generation Canadians pay digitally or not at all.
Interac e-Transfer saw a record year. Since March 2020, Interac noted a whopping 113% increase in e-Transfer transactions received by businesses, with the overall business user growing by 26.7%. 2020 saw more than 763 million Interac e-Transfer transactions sent. 2021 promises to not only meet this amount but exceed it as well.
EFT’s steal the spotlight. According to Payments Canada, EFTs lead the way, holding 55% of the total transaction value of all payment types. With 2.9 billion EFT transactions worth $5.1 trillion in 2020, EFT has the top spot.
Could credit cards be on the way out? While still a widely used payment source, credit cards are not as sought after as they used to be. In 2021 we saw a year over year decline of 11% in credit card usage. The promise of faster pay from account-to-account (A2A) payments combined with trends like buy now pay later (BNPL) woo millennials and Gen Z away from the traditional into new ways of digital payments.
What’s on the horizon for digital payments in 2022?
Stay tuned for our next series where we discuss the burgeoning PaaS infrastructure and explore what we can expect to see happen in the digital payments industry in the coming year and beyond.
In the meantime, if you haven’t had the chance to watch world-renowned economist Niall Ferguson’s Emmy award-winning documentary, The History of Money, we highly recommend watching it. Ferguson delivers an insightful account of the history of money over time and how it has shaped our present-day views.