Deepak Anand rarely leaves his house with more than his mobile phone. His credit cards and loyalty cards are all on it, allowing him to make payments and collect points without carrying a bulky wallet.Rafal Gerszak/The Globe and Mail
Deepak Anand considers himself a savvy consumer and enjoys collecting coupons and participating in customer loyalty programs, but for a long time the practice wasn’t very convenient.
The 42-year-old Vancouver resident still remembers leaving the house with a stack of coupons, punch cards, membership cards, cash and a multitude of credit cards, all crammed into an overstuffed wallet. Those days are long behind him.
“Now I very, very rarely leave the house with as much as a single credit card; it’s all on my phone,” he says. “Everything is right there on one device, and you don’t need to worry about stacking your wallet with four credit cards and another seven points cards, which becomes a pretty thick wallet to lug around everywhere.”
Mr. Anand says the only card he carries with him these days is his driver’s license, though he hopes to see that go digital soon too. He pays for almost everything by tapping his smart watch or phone and continues to collect points and coupons using app-based loyalty rewards programs.
“The savings you can get from these rewards programs are quite significant,” he says. “Whether it’s Starbucks or McDonald’s or Tim Hortons or even airlines, I use those rewards programs quite frequently, and now that can all be done through apps.”
Mr. Anand considers himself an early adopter of payment technologies, having migrated some of his loyalty and payment methods to an app even before Google and Apple integrated the technology into their smartphones. In recent years, he’s seen others following his lead. Even Mr. Anand’s wife Maneta, who previously carried dozens of cards with her, has turned to more digital alternatives, and she’s not alone.
During the pandemic many Canadians began using digital banking services out of necessity. Now that they’ve grown accustomed to transacting virtually, Canadians expect to be able to participate in loyalty programs, collect coupons, transfer money, make transactions – even make investments – without carrying so much as a single card with them.
According to a study conducted by Payments Canada, 79 per cent of all transactions in 2020 were completed digitally, with online transfers growing by 48 per cent and e-commerce payments increasing by 20 per cent. Another survey conducted by the Canadian Bankers Association (CBA) earlier this year found that the average Canadian uses contactless or tap payments more frequently.
That study also found that 89 per cent of Canadians used digital banking services at least once in the last year, and 78 per cent are using online tools to complete a majority of their transactions.
Furthermore, 65 per cent of respondents accessed those digital services using a smartphone – up from 56 per cent in 2018 and 44 per cent in 2016. Overall, three quarters of Canadians intend to keep the digital banking habits they developed during the pandemic.
“The shift to digital, of course, predated the pandemic but it certainly has been accelerated by it,” says Mathieu Labrèche, the director of media strategy and communications for the CBA. “Canadians just moved more of their daily activities online, by necessity.”
Contactless and online transactions aren’t exactly new innovations, but the consumer habits around those tools are, says Edgar Barbosa, a partner with PwC Canada who leads its Canadian payments practice.
“Now that you’ve broken through the barrier of buying a pair of shoes or jeans online, trying them on and then having a return experience that’s not disastrous, you’re probably more inclined to shop online moving forward.”
The other major change brought by the pandemic that Mr. Barbosa says he believes served to increase the utilization of digital payment methods was a simple change in the transaction limit on contactless payments.
“The credit card companies came together in very rapid fashion to move the contactless transaction limit from $100 to $250, which was actually quite meaningful,” he explains. “For the first time ever, we as a country tipped in favour of using more contactless transactions [than keypad transactions].”
Both Mr. Labrèche and Mr. Barbosa say more innovation is coming to Canada’s payments landscape next year when a multiyear modernization effort introduces Canada’s first Real-Time Rail (RTR) payments system. Once launched, RTR will enable instant payments around the clock, 365 days a year.
Unlike existing infrastructure, RTR can remove funds from the payer’s account in real time, and deposit them into the recipient’s account instantly, with no waiting periods or downtime.
RTR payments will also be embedded with more data, giving consumers greater insight into both individual purchases and broader spending habits, while giving merchants access to valuable information about their transactions.
“Holds on cheques are annoying for consumers, interest charges are annoying for consumers, drafts and certified cheques are annoying for consumers,” says Tracey Black, president and chief executive officer of Payments Canada. “All of those irritations, all of those types of payments, the experience should be dramatically better when we have a real-time system in Canada.”
Even more significant are the innovations that RTR will enable that we can’t even conceive of today, Ms. Black says.
“That real-time movement of irrevocable funds will create an opportunity for payments innovation. It will allow for new payment experiences, and there will be payment experiences I couldn’t imagine today.”