COVID-19 has caused major changes to payments preferences and spending habits of Canadians with most of them continuing to maintain a digital-first mindset, according to several new reports.
Payments Canada released new data on Canadian payment trends since the onset of COVID-19, showing that payment preferences of 44 per cent of Canadians have changed to digital payments long-term, while many reported mixed sentiment around the permanency of these payment preferences.
The data also indicates that Canadians continue to spend less overall with a continued preference for contactless payment methods. Sixty-one per cent of Canadians are spending less overall, and 47 per cent report tapping their debit and credit cards more often than pre-COVID, compared to 53 per cent at week five of the pandemic. Moreover, 36 per cent of Canadians report avoiding shopping at places that do not accept contactless payments and 64 per cent of Canadians report using ATMs less.
The new data echoes a number of payment trends observed by Payments Canada in May 2020 continue: Increased use of electronic payments and e-commerce, a preference for contactless and online-mobile banking, and a decline in the use of cash and cheques.
Consumers in Canada were already shifting more and more to digital payment methods for purchases and money transfers before March. The Canadian Payments: Methods and Trends 2020 report also showed a surge in electronic payments, which represented around 77 per cent of all transactions in 2019.
But the pace of change has rapidly accelerated since then as Canadians have adapted to physical distancing and found ways to manage their financial anxiety, according to Interac.
“There’s no doubt that the COVID-19 pandemic continues to accelerate the adoption of digital and contactless payments with a widespread shift away from paper-based payments,” said Cyrielle Chiron, head of research and strategic foresight, Payments Canada.
But, she also said that this is a trend that the company has seen over a number of years. “The reality is that Canadian consumers and businesses want more efficient, faster and more secure payment options, so we can expect this trend to continue long-term with a focus on payments innovation.”
According to the RBC COVID Consumer Spending Tracker, card spending volumes in Canada continued to defy case counts in the country through mid-November, and led to a surge in online sales: Consumer categories broadly saw increases in remote transactions.
In May, online sales more than doubled compared with last year, to $3.9 billion. That still represents just one-tenth of the retail market in Canada, but is a significant boost from the past: In 2019 online sales were four per cent of the market.
Payments Canada data also indicates the same trend, revealing that 48 per cent of Canadians are using e-commerce platforms more often than pre-pandemic, and 29 per cent are using food delivery services such as Uber Eats and Instacart more often than they did pre-COVID-19 (up three per cent).