The Rapid Evolution Of Payments In Canada
Development and Innovation The modern world is an ever-evolving maze of innovations and new developments.
Technologies that seemed impossible a few short years ago are now commonplace, meaning that every system — including the Canadian payments ecosystem — needs to evolve commensurately in order to stay fast, transparent and, above all, relevant. This fact is highlighted in a recent study from the Canadian Payments Association (CPA).
Canada’s payment needs
Along with technological advancements comes an evolution of expectations from consumers and businesses who now need service providers to support flexible and secure payment experiences. According to the recent CPA study, businesses have expressed a clear desire for near real-time, data-rich payments and to receive notifications that describe payment status, as well as being able to initiate and receive payments around the clock. Though Canada’s payment systems are currently largely outdated, investments are being made in the payments infrastructure that will make funds available in less than a minute.
According to Sam Jawad, President of Chase Paymentech Canada and Emerging Markets, this type of convenience, coupled with simplicity, is the way forward. “Payment incumbents need to look beyond basic payment processing to value-added services for merchants and their customers — that is the only way to support sustainable premiums. People happily pay for services, such as Netflix and Spotify, because it’s clear they add value proportional to their simple and straightforward costs.”
How we pay for goods and services has rapidly changed over the last few years, mainly due to the substantial increase in smartphone ownership in Canada as well as the rise in mobile banking. The CPA study found that approximately 70 percent of Canadians use smartphones, while almost 35 percent reported using mobile banking in the last year. In addition, 48 percent of Canadians are now using online banking as their primary method of bill payment, all of which is pushing everyday payment experiences towards the electronic realm. While increased online activity means merchants need to adapt to impending changes, there’s solace in the fact certain companies are poised to get these businesses ready for the changing landscape ahead — catalyzing the ultimate aim of driving sales in the process.
“The goal of every merchant is to drive sales, and acquirers exist to facilitate these sales,” added Jawad. “Merchants and acquirers can innovate to make the commerce process smoother for consumers by making payment an invisible part of the act of buying, which should improve conversion and directly feed the merchant’s bottom line.”
Modernization and convenience
As part of the study, the CPA has evaluated modernization in other countries in order to provide insight into Canada’s payment future. Though there are numerous successful implementations of payments systems from around the globe, the prevailing factors are establishing a new, faster system, rather than upgrading existing infrastructure and incorporating support for ISO 20022, which is becoming the global message standard. These innovations are also filtering into the corporate world, as digital companies like Google, Amazon, and PayPal, to name a few, are introducing inventive payment products, such as digital wallets, in-app payments, and app-based virtual banks. This progression means cash is quickly becoming a relic of the past, something blatantly reflected in the statistics. Cash now represents only 43 percent of the total transactions at point of sale, having declined 17 percent over the past six years. This number is set to drop even further in coming years, as the introduction of new products and services will likely accelerate the move towards even more electronic payments.
The future is a digital world, as dictated by consumer’s desires. This digital inevitably needs to be backed up by forward-thinking merchants, willing to adapt to the new landscape. The concept of click of a button is at the forefront of almost every digital company now, but behind that concept lies the burgeoning world of FinTech in order to make the one-click convenience as secure as possible.