Contactless Transactions Take the Lead in Canada’s In-Store Purchases

– Annual Growth of 17% in Contactless Payments and 42% Rise in Smartphone Transactions Reflects Major Shift in Canadian Consumer Spending Habits –

(Toronto, September 17, 2024) – The number of contactless payments in Canada increased by 17% in 2023 to reach 63% of all in-store payments, according to the recently released Canadian Payments Forecast, 2024, published by Technology Strategies International Inc. The value of contactless payments increased by more than $80bn over the year representing a year-on-year growth of 20%.

“There are a number of factors that have driven the high growth in contactless payments in Canada over the past ten years,” says Christie Christelis, President of Technology Strategies International. “Almost all debit and credit payment cards can now be used for contactless payments, and the penetration of contactless payment terminals is high among merchants. The increase in the contactless payment limit to $250 during COVID has allowed consumers to pay for higher ticket items without the need for PIN entry. Together these have created an environment that have allowed contactless payments to dominate transaction volumes for in-store payments.”

Contactless payment cards account for three-quarters of contactless payment transactions in Canada, but smartphone and wearable payments have gained significant traction over the past few years, says the report. At the end of 2023 there were almost 30 million smartphones in use in Canada, with 74% of them being NFC-enabled. The number of in-store mobile transactions has grown by 42% over the year and now represents about 23% of all contactless transactions.

“The ease, convenience and speed of contactless payments has had a major impact on the use of non-card form factors for payments,” says Christelis. “We have seen a huge increase in the use of wearables to make contactless payments. Although the use of wearables for payments is still in its infancy in Canada, we have reached an inflection point and we expect growth in wearable payments to be double that of in-store mobile payments over the next five years both in terms of value and volume of transactions.”

While in-store payments account for almost 90% of all consumer payments in Canada and payment cards remain the dominant form factor, mobile payments are becoming increasingly important in remote payment and money movement activities, according to the report. Mobile bill payments and transfers represented 73.5% of all bill payments and transfers in 2023, with the share expected to increase to 82.1% by 2028. More than 50% of adult Canadians use their smartphone for online shopping.

Additional highlights from the study include:

Credit card payments represented 56% of all consumer payments by value in 2023 and are expected to increase to 62% by 2028
The purchase and use of prepaid cards has shown strong growth over the past two years
Online purchases are expected to grow at a slower pace after the surge experienced during the COVID-19 pandemic
The value of cash in circulation in Canada has dipped for the first time in several decades

The 140-page report provides a comprehensive review, analysis and forecast of consumer payments in Canada. The analysis draws on TSI’s annual tracking market research study, Canadian Consumer Payments Survey, 2024, with more than 2,000 adult Canadian respondents.

The report identifies high growth segments in the Canadian payments market in the context of important recent developments in the economy, technology and the industry. Detailed forecasts are presented for credit card payments, debit card payments, cash payments, cheque payments, contactless payments, mobile payments, wearable payments, online payments, bill payments and transfers, prepaid cards, gift cards, P2P payments, international remittances, ABM installations and POS terminals.