Stephen Yun
Senior Analyst, Market Insights,
Payments Canada
In 2023, 21.7 billion retail payment transactions were made in Canada, totalling $11.9 trillion. That’s a lot of payments and a lot of money spent by Canadians.
As we enter arguably the busiest holiday shopping period of the year, here’s a closer look at the retail payment options that consumers are using. These trends are important for businesses to understand, to inform their decisions on how to send and receive payments, ensuring they meet their current and prospective customer’s payment needs and preferences.
According to Payments Canada research, Canadian e-commerce – using web-based storefronts and applications via computers or mobile devices to obtain goods and services from merchants – grew to $71.6 billion last year, or 546 million transactions in 2023. The top categories of online purchases included clothing, restaurants/fast food, groceries, electronics and personal beauty products.
Close to three in five Canadians (57%) made an online purchase in the past month (up from 55% in 2022). Credit cards continued to be the preferred choice for e-commerce transactions at 57% followed by PayPal and debit cards at 18% each.
When looking at all payments, credit cards (33%) and debit cards (30%), made up 63% of total payment volume. Electronic funds transfer (EFT) represented 15% of payment volume, followed by cash at 11%, online transfer at six per cent, and prepaid, ABM and cheque each at two per cent.
Prepaid cards showed the greatest transaction value growth among cards at 10%. Canadians reported using prepaid cards to make payments quickly, to receive discounts/loyalty rewards and to use their own funds. The average prepaid transaction value was $69. Open-loop, reloadable prepaid cards are popular among younger consumers because many of them feel that prepaid cards represent a more economical and effective way to manage their spending than credit or debit cards.
Cash transaction volume increased by 15%, while transaction value increased by four per cent. The average cash transaction value was $26, slightly lower than 2022 at $29. Almost half of all Canadians (49%) frequently used cash in 2023. Many people still rely heavily on cash, particularly the elderly, the unbanked and those who use cash for low-value payments.
Online transfers (such as Interac e-Transfer and PayPal) volume and value grew by 14% and 20% respectively as the fastest-growing payment type (136% and 160% respectively). For the first time ever, we saw online transfer usage surpass cheques based on volume for business payments.
Thirteen per cent of Canadians used smart devices or social media for placing an online order or initiating a payment in a given month in 2023 (up slightly from 11% last year). The following types of smart devices or social media were used for online purchases in a given month: Alexa/Amazon (three per cent), Google Home (three per cent), Instagram (three per cent), Facebook (three per cent) and Apple Siri (two per cent).
Overall, Canadians were generally satisfied with their payment experience buying online in 2023. Over half of all consumers (56%) were satisfied with the time it took to execute the payment when making a payment through a website or payment app (up from 50% last year). However, over one in ten Canadians (13%) experienced not being able to use their preferred payment method while shopping online (up slightly from 11% last year).
Having a diverse selection of payment options is important in attracting and retaining customers.
If you’re a business looking to learn more about the payment preferences and behaviours of your customers this holiday season, take a look at Payments Canada’s Canadian Payment Methods and Trends report.
