Canada’s payment landscape is quietly but profoundly changing. From going contactless to dabbling with blockchain, Canadians are flocking to a whole bunch of new ways to pay — and enjoy snappier, more secure, and more flexible payments. At the core of this transition is more than just consumer convenience, though, but also technological breakthroughs, regulatory change, and the quest for worldwide interoperability.

This article will address the ubiquity of cards, the expansion of contactless and mobile payments, the strengthening of digital wallets, and the re-emergence of Interac, as well as newer payment technologies that have come about in recent years.

Credit and Debit Cards: Still In First Place

Credit and debit cards continue to be the “go-to” for Canadian consumers’ everyday purchases. Credit cards made up 33 per cent of total payment volume in 2023, followed closely by debit cards at 30 per cent. Large networks such as Visa, Mastercard and American Express are broadly accepted, and contactless is the norm.

Credit and Debit Cards: Still In First Place

Canadians own an average of three contactless cards. Almost three-quarters of Canadians relied on credit cards for necessities in 2023, and the number of credit card transactions totalled 6.8 billion. Debit cards also recorded high engagement, at an average of 164 transactions per capita.

The Contactless Revolution

The COVID-19 pandemic hastened the move to contactless payments, which have been adopting the well-liked tee up of “tap and go.” By 2023, however, contactless payments accounted for 63% of all in-store transactions, a 17% rise over the prior year.

Canadians tap to pay with physical cards and also use smartphones and wearables to do so. Contactless volume grew 11% from 2021, and the total transaction value was up 18%, to $379.7 billion. In most businesses, from restaurants to transit systems, there are now contactless payment terminals.

Also read: Top Local Solutions for Payments in Belize

The rise of Digital Wallets & Mobile Banking

Digital wallets like Apple Pay, Google Pay and Samsung Pay are taking off precisely because they offer secure, tap-friendly interfaces.

In early 2023:

• Canadians were in-store digital wallet users at 51% and 26% deployed them for in-app payments
• Apple Pay (42%), PayPal (23%) and Google Pay (22%) were the three dominant platforms in the market.

Growth in mobile point-of-sale payments: Mobile point-of-sale payments will nearly double from $43.16 billion in 2024 to $78.28 billion in 2028.

And mobile banking is ubiquitous. Some 89 per cent of Canadians did some form of online banking over the past year, while 65 per cent used their bank’s mobile app, up from 56 per cent last year. The change is most striking among Gen Z and Millennials.

New Players in Town: BNPL, Crypto & QR Codes

Buy Now, Pay Later (BNPL)

Services such as Afterpay, Klarna and Affirm have gained popularity, particularly among younger shoppers looking for budgeting flexibility. Roughly 14% of Canadians turned to BNPL in 2022, and the market is expected to surpass USD 17 billion by 2028.

Cryptocurrencies

While not yet common, cryptocurrencies such as Bitcoin and Ethereum are beginning to find a home in the Canadian payments landscape. Crypto ownership fell to 10% in 2023 (from 13% in 2022) as a wary sentiment prevailed in the face of price volatility and the threat of regulation. Even so, businesses are starting to get on board with crypto, and the government is looking into blockchain for cross-border transactions.

QR Code Payments

Fast and convenient, QR code payments are becoming increasingly popular in restaurants and with small businesses. Customers scan a code, approve the payment, and they’re done — perfect for person-to-person or low-value transactions.

Also read: Popular Local Payment Methods and Solutions in Bhutan

Cash and Cheques: Holding Out

Even with digital’s growing dominance, cash has stubbornly stuck around, notably for smaller purchases. Canadians opened their wallets three per cent wider in 2023, when they spent a record $62.6 billion in cash, compared with the year before at $60.1 billion. Curiously, Gen Z carry more cash on their person—$100 on average—than Boomers, who carry $70.

Cheques, however, are fading. There were 404 million written in 2021—nearly 200 million fewer than in 2019. One in three Canadians expects to cut cheques out of their life in five years.

Behind the Scenes: Payments Processing & Regulation

It's backed by strong financial institutions & processors in Canada. The ‘Big Five’ banks – RBC, TD, Scotiabank, BMO and CIBC – have integrated offerings that bring together cards, mobile, Interac and global transfers.

Standalone processors, such as Moneris, Helcim, and Elavon, that handle in-store, online, and mobility can help with custom POS systems, security features, and analytics. PayPal continues to be a major player in online shopping and digital wallets.

Key regulators include:

• The Financial Consumer Agency of Canada (FCAC)
• Payments Canada (formerly Interac) (interbank clearing)
• Bank of Canada (oversight of the payment system)

Payment Card Networks Act, Personal Information Protection and Electronic Documents Act (PIPEDA) and the new Retail Payment Activities Act (RPAA) are the main legislative pillars for the regulation of payments.

As Canadians and businesses become more involved in international trade, the demand for reliable, quick and compliant cross-border payment services is on the rise. That’s where platforms like Transfi come in. With settlements and payments taking several business days, there are clear inefficiencies and complexities when moving various fiat across geographies.

Transfi’s global payments backbone is designed for simple cross-border transactions – perfect for when companies need to pay foreign suppliers or freelancers, and vice versa, a receive revenues across the world. Their offerings cut settlement periods and exchange rate headaches while staying in compliance with changing regulations.

Conclusion

Canada is leading the way in the worldwide move to digital payments, where speed, convenience, and security meet. Credit and debit cards — a pretty mature pair of payment forms — still rule the roost, but new-age options like contactless payments, digital wallets and Interac e-Transfers are mixing into ordinary financial routines. This is on top of the increasing use of QR codes, BNPL and blockchain, demonstrating that Canadians don’t just anticipate the future—they are already living partially in it.

FAQs

What Is the Most Used Payment Method in Canada?

The most popular payment instruments are credit and debit cards, which represent more than 60% of all payments, respectively. The in-store purchase is particularly dominated by contactless payments.

Are contactless and digital wallet payments safe?

Very safe. Contactless payments are encrypted, and for digital wallets, the use of biometrics and tokenisation to protect payment information is consistent.

What can Interac e-Transfer be used for?

Interac e-Transfer allows users to send and receive money via email or phone number—perfect for rent, splitting bills or sending a gift.

Do Canadian people still use cheques?

Cheques are still a thing, especially in B2B transactions, but that’s on the decline. In five years, a majority of Canadians will stop using cheques altogether.

What does Transfi do for companies in Canada?

Transfi offers easy global payments & a robust payment gateway with multiple currency options, digital wallets, and fraud suite protection, perfect for online business and ecommerce.

‍