The digital payment landscape in Canada is varied and growing. It consists of both credit cards and mobile wallets like Interac, in e-commerce and POS. Digital wallets, in particular, are growing in popularity. They gained 4% of the market share between 2021 and 2022, and the size of the market for payment services such as Braintree, Stripe, and Adyen expanded. At the same time, the use of credit cards has remained static in POS shopping in Canada, although digital usage has grown.
Of course, digital wallets are only part of the story when it comes to cashless payments in Canada. Other options include buy now pay later (BNPL) and cryptocurrencies. So, what do the current Canadian digital payment market figures suggest, and which cashless payment options are likely to be a major focus for Canadians?
Growth of the Digital Payment Market in Canada
For 2023, the total value of digital payment transactions in Canada is expected to be US$137 billion. This value is expected to experience a compound annual growth rate (CAGR) of 13.75% between 2023 and 2027.
If these predictions are accurate, the value of digital payment transactions will reach US$229.4 billion by 2027. The highest level of digital payment expenditure is in the digital commerce market, where there is a predicted transaction value for 2023 of US$98.78 billion.
The Rise of Interac and BNPL
Within the digital payment market, Interac plays a prominent role. The country’s debit network is the Canadian payment method that is a popular choice for people paying for products online as well as services such as gaming and movie streaming. In fact, Interac is second only to PayPal as the online payment choice for Canadians, according to a 2022 survey.
It’s also a trusted payment method ranked as the fifth most reputable brand in Canada in 2022. The Bank of Canada made Interac a Prominent Payments System (PPS). This makes it part of the development of real-time payments in the country. In 2022, Interac e-Transfer made up around 6% of general payments in Canada.
Digital payment systems like Interac face competition in the cashless payment market in Canada. Buy now pay later (BNPL) is expected to become especially prevalent. Right now, the method of obtaining credit is behind credit cards. Of people who changed their spending habits and used credit during 2022, 53% used credit cards.
The figure was 16% for those who used BNPL. However, experts predict that the acceptance of credit card use in the country will lead to an increase in the use of BNPL. There are several factors that support this expectation.
- Experts predict that seven out of 10 Canadian vendors will provide BNPL as an option on their website in 2024.
- Estimates suggest that BNPL transactions will increase by 20% from 2022 to 2023.
- If estimates for BNPL transactions for 2023 are accurate, they will make up around 7% of the total transaction value for North America.
Given the current cost of living crisis, it’s likely that credit solutions will continue to compete with digital payment options such as Interac as they both continue to increase their share of the cashless payment landscape in Canada.
