Canadian payments forecast, 2012 - news release

News Release
May 16, 2012
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Cash threatened by contactless and mobile payments

(Oakville, Ontario – May 16, 2010) — Contactless payments are rolling out rapidly in Canada, and are likely to account for significant transaction volumes and values by 2016, a new study published by Technology Strategies International predicts.  According to the recently released market research report titled “Canadian Payments Forecast - 2012”, there is also strong interest in mobile 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 into strongholds previously reserved for cash and, to a lesser extent, cheques.

“Cash, as a means of payment, is increasingly under threat,” says Christie Christelis, President of Technology Strategies International.  “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 were:

  • Contactless payments have continued to extend their reach over the past two years, achieving a substantial penetration level in appropriate payment settings. Interac’s Flash is expected to make an impact in the next two years.
  • Smartphone penetration is increasingly rapidly, and by 2016 almost 80% of the smartphones in Canada will be NFC-enabled, providing a solid foundation for the uptake of mobile contactless payments.
  • The closed-loop gift card market is expected to expand rapidly, accounting for about $5 billion in redeemed value in 2016.
  • Cash will remain the most frequently used form of payment in Canada over the next five years, but will suffer substantial erosion from contactless debit and credit payments

The 116 page report provides a comprehensive review, analysis and forecast of consumer payments in Canada.  It identifies high growth segments in the Canadian payments market in the context of some important recent developments in the economy and the industry.  Detailed forecasts are presented for credit card payments, debit card payments, cash payments, cheque payments, contactless payments, open-loop prepaid cards, closed-loop gift cards, cross-border debit payments, online payments, ABM installations and POS terminals.

About Technology Strategies International
Technology Strategies International is a leading Canadian technology market research firm based in Oakville, Ontario.  Established in 1995, the company has been tracking developments in Canadian payment industry for the past seventeen years.  For more information please see http://www.tsiglobalnet.com/research.html.   

Media Contact Information:
For interviews please contact:
Christie Christelis,
President,
Technology Strategies International
Tel: +1 416 628 0796
e-mail: Christie@tsiglobalnet.com
www.tsiglobalnet.com

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