What Canadian retailers need to know about payment trends in 2024
The Canadian payment landscape is undergoing a transformative shift, propelled by technological innovations and changing consumer behaviors. As we move towards 2024, Canadian businesses face new opportunities and challenges in how they handle transactions. This article explores the latest payment trends in Canada and discusses how businesses can stay ahead in a rapidly evolving market.
The Canadian payment processing market
The Canadian payment processing market is a burgeoning powerhouse, valued at approximately CAD 7120 billion annually. This market is projected to grow at a compound annual growth rate (CAGR) of over 6% through 2026, with even more optimistic forecasts suggesting a CAGR of 15.4% from 2022 to 2027.
This impressive growth is primarily fueled by the rapid adoption of online payments and the expansion of e-commerce, anticipated to reach CAD 100 billion by 2024. The rise in digital shopping, facilitated by widespread smartphone usage, is transforming consumers' buying habits, pushing businesses towards more digital and contactless payment solutions. Additionally, over 75% of Canadian businesses are planning to adopt more digital and contactless payment methods within the next year, indicating a shift towards a more digital economy.
The expansion of the market is also driven by innovations in financial technology and increased consumer preference for convenience and speed in transactions. Mobile payment solutions are becoming increasingly prevalent, with more Canadians using their mobile devices for everything from small retail purchases to large financial transactions. This shift is supported by the improved security measures that accompany digital payments, reassuring both consumers and businesses about the safety of their transactions.
Regulatory changes are also playing a crucial role in shaping the payment landscape. The Canadian government and financial regulators are actively updating policies to ensure a secure and equitable financial environment that can keep up with technological advancements. These regulatory frameworks are designed to protect consumers and businesses, reduce fraud, and foster innovation in the payment sector.
Overall, the Canadian payment processing market is set for dynamic growth, with technological advancements and a shift in consumer behavior towards digital solutions driving significant changes in how businesses and consumers engage in transactions. As this market evolves, Canadian businesses are urged to stay informed and agile, adapting to new technologies and regulatory requirements to remain competitive and secure in the digital age.
Key payment trends in Canada
Expansion of contactless payments
The shift towards contactless payments in Canada has been remarkable, registering a 53% increase in mobile debit contactless transactions from 2022 to 2023, as noted by Interac. This surge is significantly influenced by Generation Z consumers, who prefer the speed and convenience of mobile wallets on their smartphones. Nearly 80% of Gen Z users are frequent users of mobile payment methods, and they often play a crucial role in educating older generations on the benefits and operations of these technologies.
Businesses across Canada are rapidly adapting to meet these preferences. The trend is moving decisively towards a cashless society where consumers increasingly expect the ability to pay with their smartphones or even smartwatches. Retailers and service providers are therefore under pressure to update their payment systems to accommodate this shift, ensuring that they can handle transactions without physical cards or cash, thereby maintaining essential revenues and enhancing customer loyalty.
Growth of softPOS technology
SoftPOS technology is revolutionizing the payment industry by enabling merchants to use their smartphones as point-of-sale terminals. This innovation eliminates the need for traditional, bulky payment terminals and is particularly beneficial for small and medium-sized enterprises (SMEs) that may find the cost of standard POS hardware prohibitive.
According to a report by Fortune Business Insights, the global market for softPOS is projected to reach more than CAD 1.462 billion by 2030, growing at a compound annual growth rate of 20.4%. In Canada, the adoption of softPOS is expected to outpace this global trend, with KBV Research predicting a 21.9% CAGR for the Canadian softPOS market. This growth is fueled by the technology's ability to lower the barriers to entry for contactless payment acceptance, allowing merchants to use devices they already own without additional investment in hardware.
Biometric Payment Systems
Biometric payment technologies, which include fingerprint, facial, and palm vein recognition, are emerging as a secure and convenient payment method. These systems enhance transaction security and are becoming more accepted by consumers concerned about data privacy.
BNPL services
BNPL (Buy Now, Pay Later) services are growing in popularity, particularly among younger consumers. This payment option allows consumers to manage their budgets more effectively by paying for purchases in installments. As BNPL services become more widely known, retailers should consider integrating this payment option to capture more revenue from high-value transactions.
How Silkpay supports Canadian businesses
Diverse payment options: Recognizing the growing preference for non-contact payment options among Canadians, Silkpay offers a diverse range of payment methods tailored to the needs of modern consumers and businesses. This includes traditional credit cards such as Visa and Mastercard, as well as digital wallets like Apple Pay and Google Pay which are increasingly popular among Canadian shoppers for their convenience and security. Moreover, Silkpay has integrated Alipay+ into its service offerings, which is particularly significant. Alipay+ is a global solution that supports more than 16 different e-wallets, vastly expanding the reach of businesses into international markets and catering to the preferences of a diverse customer base.
SoftPOS technology: Embracing the latest in payment technology, Silkpay also provides mobile POS solutions, which transform any smartphone or tablet into a payment terminal through a specialized app. This technology is particularly beneficial for businesses looking for flexible and low-cost options to accept payments. SoftPOS eliminates the need for traditional hardware terminals, reducing the overall cost of ownership while providing the capability to process payments anywhere, at any time.
Through these technologies, Silkpay not only enhances the payment flexibility of Canadian businesses but also ensures they are well-equipped to meet the challenges of a digital-first retail environment. By adopting Silkpay's comprehensive payment solutions, businesses can significantly improve their operational efficiency, customer satisfaction, and ultimately, their bottom line.
Conclusion
The Canadian payment landscape continues to evolve rapidly, driven by technological innovations and changing consumer preferences. The surge in contactless payments, the growth of softPOS technology, the emergence of biometric payment systems, and the popularity of BNPL services reflect the shifting dynamics of the market. Canadian businesses are adapting to these trends by embracing diverse payment options and leveraging advanced technologies to enhance customer experiences and operational efficiency.
Silkpay, as a payment solutions provider, supports Canadian businesses by offering tailored payment solutions. By staying informed and agile, businesses can navigate the evolving payment landscape and position themselves for sustainable growth in the digital age.
Source
https://www.clearlypayments.com/blog/payment-processing-2024-market-statistics-in-canada/
https://ingenico.com/ca-en/newsroom/blogs/retailers-keep-close-watch-these-payment-trends-2024
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About the author: Silkpay
Based in Paris, Silkpay provides omnichannel and secure payment solutions to help physical stores and e-commerce in Europe accept more than 30 of the world's most popular payment methods: Visa, Mastercard, CB, UnionPay, Alipay+, WeChat Pay as well as Asia-Pacific’s major e-wallets.
Silkpay is a winner of the LVMH Innovation Award. The company was also selected as a finalist for the "Money 20/20" Best Startup and in the "MPE Berlin” Startup Awards. Silkpay also won the "Best Fintech" awards from Capgemini and BPCE.
Silkpay helps merchants deliver the smoothest payment experience to their customers. We are a talented and international team driven by a single goal: to improve the customer experience and make payments simple and secure.