By Jon Purther, Director of Research at Payments Canada
Payments are an essential part of our economy and way of life. From a down payment on a home, an invoice paid to a local business or a first paycheque — payments keep Canadians and the economy moving forward.
As the owner and operator of Canada’s national payment clearing and settlement systems, Payments Canada ensures that these financial transactions are cleared and settled between financial institutions safely and securely. We do this by providing secure and resilient payment infrastructure, including technology, by-laws, rules and standards to support it.
Payments Canada also conducts and publishes research to inform policy development and strategic decision-making within the payment industry. This includes research that provides insight into the payment preferences and behaviours of Canadian businesses and consumers. Each year, Payments Canada provides an overview of the retail payment trends observed nationally through the publication of the Canadian Payment Methods and Trends report.
This report provides expert insights on key drivers, emerging issues and relevant developments within the Canadian payment ecosystem. It’s also an excellent resource for businesses looking to keep abreast of the latest payment trends and behaviours.
An overview of the Canadian payment landscape
In 2023, 21.7 billion retail payment transactions were made in Canada, totalling $11.9 trillion. Overall, the Canadian payment market grew by six per cent in volume and one per cent in value from 2022 to 2023.
Credit and debit cards remained the leading two payment methods of choice. Combined, credit cards (33 per cent) and debit cards (30 per cent), made up 63 per cent of total payment volume. Electronic funds transfer (EFT) represents 15 per cent of payment volume, followed by cash at 11 per cent, online transfer at six per cent, in addition to prepaid, ABM and cheque each at two per cent.
Prepaid cards showed the most significant transaction value growth among cards at 10 per cent. Canadians report 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.
Online transfers (such as Interac e-Transfer and PayPal) volume and value grew by 14 per cent and 20 per cent respectively as the fastest-growing payment type. For the first time, online transfer usage surpassed cheques based on volume for business payments.
Embracing payment innovation
Over the years we’ve seen a continued shift toward digital payments. Payments Canada research shows that this trend is not slowing down as Canadian consumers and businesses continue to show interest in new payment innovations. Of particular note to businesses, consumer interest in payment innovations like real-time payments, contactless payments and generative artificial intelligence is growing.
The majority of Canadians (59 per cent) would send real-time payments if the option was available. The top payment situation for sending money in real-time is sending money to an individual or business when the payment amount exceeds their daily Interac e-Transfer amount limit (20 per cent).
Similarly, this growing interest in leveraging payment innovation to make their lives easier is demonstrated in consumer use of contactless payments. In 2023, contactless payment options like wearables (for example, fitness trackers and smartwatches) were used to initiate 44 million payment transactions in 2023, totalling $1.1 billion. More than one in ten Canadians (13 per cent) use smart home devices and social media to make purchases.
Looking specifically at payment innovations and businesses, our research shows that almost one in two businesses (49 per cent) intend to use generative AI to make their operations and processes more efficient. The top three generative AIapplications perceived to benefit businesses most are fraud detection and prevention (44 per cent), automating payment processing (37 per cent) and creating personalized customer experiences (29 per cent).
Hanging onto traditional ways to pay
A critical finding from our research that businesses should know about is that cash is still a preferred payment choice among consumers. Despite the declining trend in cash usage, over half of Canadians (55 per cent) indicated no desire to go completely cashless.
Cash continues to be a popular way to pay because it is widely accepted (38 per cent), fast (37 per cent), you can use your own funds (26 per cent), it’s easier and more convenient than other payment methods (21 per cent) and it’s easier to control and keep track of (21 per cent).
Canadian consumers have made it clear that when it comes to payments, convenience, efficiency and low cost are vital to them. When making purchases, Canadians want continued access to tried and true payment options that they have used in the past due to their ease of use and dependability.
Safety and security remain top of mind
Additional research from Payments Canada shows that nearly half (45 per cent) of Canadian businesses have noticed an increase in fraudulent, cybercrime or suspicious activity directed at them through email over the last 12 months. Businesses also noticed an increase in activity directed at them via their smartphone (42 per cent), social media platforms (39 per cent) and retail merchant sites, including e-commerce sites or apps (34 per cent).
According to businesses, confirmation of payee ー a service that checks the name of the account holder you intend to pay against the details held for that account by the payee’s bank ー tops the list among the features that would provide the most benefit to businesses overall for sending payments (38 per cent).
Similarly, request for payment ー a messaging system paired with an instant payment that businesses can use to send bills and invoices directly to customers via a mobile banking app ー also tops the list among the features that would provide the most benefit to businesses overall for receiving payments (35 per cent).
Bringing more payment options to Canadians
The availability of payment options can determine how and where Canadians choose to shop. In fact, according to our research, eight per cent of Canadians and perhaps most notably, 14 per cent of young Canadians, abandoned a purchase in the past 12 months because their preferred payment method was unavailable.
The lesson for businesses is that they risk losing customers if they do not offer diverse payment options. Ease of use and offering a wider selection of payment options﹘traditional and emerging﹘are vital to attracting and retaining customers. Evolving technologies and continued safe innovation in payments mean that Canadian consumers and businesses will have even more payment choices in the years to come.
To learn more about the work being done to bring modern payment options to Canadians, please visit payments.ca. For a more interactive experience, register for The SUMMIT, Payments Canada’s annual conference taking place in Toronto from May 6-8, 2025, where the best minds in payments connect and collaborate on the future of payments.
