Canada may be the largest country on the planet in terms of landmass, but even that’s not enough to house all of the products that Canadians end up buying online. Powered by a population of over 38 million people and a national currency, the Canadian dollar, around three out of every four online payments made went to websites based outside of Canada.
Perhaps it’s down to this range of interactions via cross-border eCommerce, or maybe it’s just a changing sentiment towards the traditional forms of payments, but Canadians look to be gradually gravitating to newer entrants to the payments scene. Storied names in online payments and transfers, naturally, have made up the most ground, but there’s also a place for newer services that specialize in filling in where the major brands don’t.
Changing state of play of Canadian payments
Visa, MasterCard, and American Express generally remain the dominant names in Canadian payments, particularly because credit cards are so ubiquitous as a form of payment in Canada. Still, eWallet, digital wallets, and mobile wallets have experienced rapid growth over the last half a decade, while credit cards and especially debit cards have experienced a decline. Since 2016, the market share of eWallets has shot up from 12 percent to 27 percent. At the same time, according to the figures collected by Statista, credit cards have declined by 28 percent, down from 70 percent in 2016.
Co-founded by Peter Thiel and sold to eBay in 2002 for $1.5 billion, PayPal is the big name fronting this surge of digital wallet payments, but the scene continues to grow with more and more specialized platforms emerging to challenge credit cards and, more directly, PayPal. MuchBetter is a prime example of this.
They’ve risen to prominence on the back of real-time transfers, the ability to deposit via a phone number, and secure links for those who wish to connect credit and other bank cards. Now, the logo is commonplace across Canadian-facing websites. You can see it as an option at popular brands like LeoVegas for deposits and withdrawals at the online casino. Here, MuchBetter stands alongside Visa and MasterCard.
Importantly, services like MuchBetter and, indeed, PayPal, allow Canadians to continue to use their tried-and-trusted credit cards, only with additional layers of security and greater ease of use. Something that the biggest name in eWallets has recently opened up to is buy now, pay later. This method of payment has also spread across Canada’s payment services and is a popular payment method. Afterpay has become a popular pick here due to its BNPL options.
Raising awareness of the extended options in Canada
Canada has been able to incubate several intriguing fintech companies over the last decade, and now, they’ve become large enough to attempt to push the federal government to modernize banking and payments. As the numbers above show, while people are starting to utilize more payment options, it’s clear that for most in Canada, payments start and end with credit cards.
Led by EQ Bank, Xero Canada, Wise, Wealthsimple, Borrowell, and Fintechs Canada, the Choose More campaign hopes to showcase that open banking and open payment services can improve one’s personal finances, but the government has been slow to open up to this modernization effort. Their biggest selling point is that this kind of democratization of payments would stop banks from charging such high fees to customers and small businesses.
Should the campaign gain traction and the federal government open up to its ideals, the payments landscape in Canada could move even more drastically away from classic payment methods. At that point, the immediate winners look to be the online businesses offering a diverse array of eWallet services.
