Canadian Cash Threatened by Contactless and Mobile Payments
Contactless payments are rolling out rapidly in Canada, and are likely to account for significant transaction volumes and values by 2016, predicts Technology Strategies International (TSI). According to the recently released market research report entitled ‘Canadian Payments Forecast – 2012’, there is also strong interest in mobile payments (m-payments), although over the next few years this is likely to ride on the back of contactless rollout.
The study found that consumer payments have rallied after the recession and all electronic forms of payment were experiencing substantial growth. The main growth drivers in the Canadian market have been increasing personal expenditure on consumer goods and services, and the increasing penetration of electronic payments (e-payments) into strongholds previously reserved for cash and, to a lesser extent, cheques.
“Cash, as a means of payment, is increasingly under threat,” said Christie Christelis, president of TSI. “By 2016 we expect to see a substantial reduction in cash transaction volumes, mainly as a result of increased penetration of contactless payments in Canada – which includes mobile contactless payments.
“Cheques have all but floundered as a consumer payment instrument, and much of the consumer cheque payment repertoire has been substituted with online bill payments,” he said. “Open-loop prepaid cards and closed loop-gift cards are also increasing in popularity, with strong growth predicted over the next five years.”
The study found that the period of regulatory uncertainty in the Canadian payments industry is expected to continue for the next few years, inhibiting the innovation strategies of some key players.
“The Ministry of Finance’s response to the Payments System Review Task Force recommendations was underwhelming,” Christelis said, “with very little clear direction being given as to what the payments industry can expect in terms of regulatory oversight in the near future.”
Some highlights from the study include: