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Canadian consumer payments make full recovery in 2021

Canadian consumer payments make full recovery in 2021

The number of consumer payments in Canada is expected to increase by 770 million transactions in 2021 after falling by 1.68 billion in 2020, according to the recently released Canadian Payments Forecast, 2021.

image of smartphone with Canadian flag

Canadian consumer payments make full recovery

The projected uptake in consumer payment transactions is a direct consequence of the increase in economic activity after the stringent measures taken to contain COVID-19 in 2020.

“The reopening of the economy on the back of an aggressive vaccination campaign, coupled with significant pent-up demand for a wide range of goods and services that were not accessible during the height of the pandemic, has resulted an increase in consumer expenditure across most categories,” says Christie Christelis, President of Technology Strategies International.

“We are expecting the value of consumer expenditure to increase by 7.5% in 2021, compared with only a 4.1% increase in the volume of payment transactions.”

The total number of consumer payment transactions is only expected to recover to 2019 levels by the end of 2022, says the report, but this masks some of the shifts taking place between different payment instruments.

“Cash suffered the most in 2020, with the number of cash payment transactions dropping by 16% over the year,” says Christelis.

“We expect the use of cash to continue to decrease over the coming years, but the rate of decline will not be as severe as in 2020.”

The year-on-year decrease in the value of consumer credit card transactions was double that of debit card transactions, a dynamic that was predicted in the 2020 report, but annual growth in the value of credit card payments is expected to exceed that for debit card payments over the forecast horizon till 2025.

“Consumers embraced contactless payments with vigour as the pandemic started to take hold, with growth in the value of contactless payments projected to be the highest across all payment categories in 2021,” says Christelis.

“The number of contactless transactions is expected to increase at lower rate, pointing to a shift in the average value of a contactless transaction.”

The report goes on to say that mobile payments have gained a strong foothold in the Canadian market, with the frequency of mobile payments increasing significantly across users.

This sets the stage for ignition of the mobile payments market in Canada, and they are expected to become a far more prominent payment mechanism over the next few years for both in-store and remote mobile payments.

Highlights from the study

  • Online purchases are expected to continue their rapid growth in 2021, with growth abating modestly to pre-pandemic levels from 2022 onwards
  • The value of international remittances surged in 2020 as more support payments were sent to family members abroad
  • Wearable payments are expected to experience supernormal growth over the next few years as consumers gain familiarity with wearable payments
  • The number of consumers using virtual currencies jumped by almost 40% over the past year


The post Canadian consumer payments make full recovery in 2021 appeared first on Payments Cards & Mobile.

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