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Canada Country Report

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  • Published Date: June 2021

A comprehensive analysis of the credit cards, payments, consumer banking and merchant acquirer market in Canada, with perceptive commentary on relevant data.
As both Open Banking and a new real-time payments infrastructure draw closer, this traditionally conservative market is set to undergo a drastic evolution in coming years, opening up opportunities for alternative payment activities.
For the first time, challengers and fintechs will be providing stiffer competition to the five-pillar establishment, some of whose members are already chasing alternative revenue streams engendered by Buy now, pay later and e-commerce developments.

What you can learn from this report:

Why increased competition is coming.
How BNPL is dividing incumbents.
What Canadians seek in credit cards.
Why debit has been impacted by new rules.
Which regulations matter the most.

Canada Cards and Payments Market Key Facts

  • Canada is a mature banking and payments market with five large domestic banks dominating.
  • Two payments systems will be replaced and a real-time payments system added in 2022.
  • Open Banking is also being developed and should incentivise the growth of digital-only challenger banks.
  • Cash use continues to decline, with many Canadians not expecting to use cash payments to the same extent as before the pandemic.
  • Cheque volume has constantly decreased, with consumer usage at a historic low.
  • Credit cards, incentivised by extensive rewards offerings, account for the bulk of the value of card purchases.
  • Operated by a bank-owned company, the domestic debit scheme Interac is popular for low-value transactions. It accounts for almost half of card purchase transactions.
  • The shift to digital payment solutions throughout the Covid-19 crisis is illustrated by the record transaction numbers for digital solutions such as Interac e-Transfer.
  • In 2020, Visa and Mastercard capped the average credit card interchange fee at 1.4 percent of the transaction value for five years.
  • Desjardins was the only leading credit card issuer to have a year-over-year increase in billed volume during 2020.

Canada Card Payments | Report Contents

TABLE OF CONTENTS
Demographics and the economy
Payments environment
Cards market
Mobile payments
Profit pool
The networks
Key retail banks and issuers
Acquiring and processing
Online acquiring
Regulatory and other cards market information

Appendices: Canada Payments Data Tables

Appendix I: Demographics and the economy

Data table 1: Demographic and economic indicators: 2015-2020. Estimates and forecasts to 2024.
Data table 2: Ownership of key consumer devices: 2015-2020. Estimates and forecasts to 2024.
Data table 3: Internet usage by population: 2015-2020. Estimates and forecasts to 2024.

Appendix II: Payments environment

Data table 4: Access points: 2015-2020. Estimates and forecasts to 2022.
Data table 5: Account penetration: 2015-2020. Estimates and forecasts to 2024.
Data table 6: Consumer payment trends: 2015-2020. Estimates and forecasts to 2022.
Data table 7: B2C e-commerce payment methods: 2015-2020. Estimates and forecasts to 2022.

Appendix III: Cards market

Data table 8: Total cards payment metrics: 2015-2020. Estimates and forecasts to 2024.
Data table 9: Contactless cards metrics: 2015-2020. Estimates and forecasts to 2024.
Data table 10: Credit card numbers: 2015-2020. Estimates and forecasts to 2024.
Data table 11: Total credit cards metrics: 2015-2020. Estimates and forecasts to 2024.
Data table 12: Credit cards profitability indicators: 2015-2020. Estimates and forecasts to 2024.
Data table 13: Debit cards numbers: 2015-2020. Estimates and forecasts to 2024.
Data table 14: Debit cards metrics: 2015-2020. Estimates and forecasts to 2024.
Data table 15: Pre-paid/e-money card metrics: 2015-2020. Estimates and forecasts to 2024.

Appendix IV: Mobile payments

Data table 16: Mobile proximity payment metrics: 2015-2020. Estimates and forecasts to 2024.
Data table 17: Mobile P2P payments: 2015-2020. Estimates and forecasts to 2024.

Appendix V: Profit pool

Data table 18: Canada profit pool: 2015-2020. Estimates and forecasts to 2024 inc. credit card numbers, billed volumes, oustandings, interest incomes, net interest revenues, merchant revenues, card fee revenues, other non-interest incomes, total revenues, net credit losses, operating expenses, total expenses, pre-tax profits, merchant service charges, rollover rates, APR, net credit losses to outstandings, operating costs to revenues, ROA (pre-tax profits to outstandings).

Appendix VI: Card networks

Data table 19: Networks' credit card market shares: 2015-2020. Estimates and forecasts to 2022.
Data table 20: Networks' credit card data numbers: 2015-2020. Estimates and forecasts to 2022.
Data table 21: Networks' credit card billed volume: 2015-2020. Estimates and forecasts to 2022.
Data table 22: Networks' number of credit card transactions: 2015-2020. Estimates and forecasts to 2022.
Data table 23: Networks' average credit card transaction value: 2015-2020. Estimates and forecasts to 2022.
Data table 24: Credit card interchange fees by network: 2015-2020. Estimates and forecasts to 2022.
Data table 25: Networks' debit card market shares: 2015-2020. Estimates and forecasts to 2022.
Data table 26: Networks' debit card data numbers: 2015-2020. Estimates and forecasts to 2022.
Data table 27: Networks' debit card billed volume: 2015-2020. Estimates and forecasts to 2022.
Data table 28: Networks' number of debit card transactions: 2015-2020. Estimates and forecasts to 2022.
Data table 29: Networks' average debit card transaction value: 2015-2020. Estimates and forecasts to 2022.
Data table 30: Debit card interchange fees by network: 2015-2020. Estimates and forecasts to 2022.

Appendix VI1: Key retail banks and issuers

Data table 31: Key credit card issuers market shares by credit card numbers: 2017-2020. Estimates and forecasts to 2022.
Data table 32: Key issuers market shares in credit card outstandings: 2017-2020. Estimates and forecasts to 2022.
Data table 33: Key debit card issuers market shares by debit card numbers: 2017-2020. Estimates and forecasts to 2022.

Appendix VIII: Acquirers and processing

Data table 34: Merchant acquirer credit card market share: Estimates for 2021.
Data table 35: Credit card merchant service charges: 2015-2020. Estimates and forecasts to 2024.
Data table 36: Merchant acquirer debit card market share: Estimates for 2021.
Data table 37: Debit card merchant service charges: 2015-2020. Estimates and forecasts to 2024.
Data table 38: Credit card issuer/issuing processor relationships.
Data table 39: Credit card acquirer/acquiring processor relationships.
Data table 40: Credit card issuing processor market shares by card numbers: Estimates for 2021.
Data table 41: Credit card acquiring processor market shares by the number of POS transactions: Estimates for 2021.

Appendix IX: Online acquiring

Data table 42: Online merchant acquirer market share. Estimates for 2021.

Canada Country Report | Selected Extracts

Demographics and Economy
As one would expect, Canada faces immense economic challenges because of the pandemic and the recent volatility in oil prices. The country fell into recession in mid-2020, although the economy is expected to return to growth in 2021.

Payments Environment
When it comes to cards, Canada has a balanced and inclusive market, consisting of a competitive credit cards segment and a popular low-cost domestic debit scheme. The country boasts high card ownership and widespread acceptance rates.

Payment Cards Market
This payment cards market enjoys great consumer penetration and merchant acceptance. The average Canadian adult made 384 card purchase transactions in 2020, a year-on-year decrease of 7.6% attributable to Covid lockdown restrictions.

Mobile Payments
Mobile payments have been increasing in popularity but in common with many other advanced economies, adoption is hindered by consumer indifference. Providers struggle to incentivise consumers to switch to mobile when many see cards with contactless functionality as offering comparable convenience.

Profit Pool
In common with markets around the world, Covid-19 has hurt the Canadian credit cards market. Following several years of sustained growth, credit card purchase volume shrank by 8% during 2020.

Card Networks
Canada's credit cards market is represented in the main by three global brands: Visa, Mastercard and American Express. There has been stiff competition between Visa and Mastercard, with the former leading the market on most metrics. The debit cards market is dominated by Canada's domestic debit network, Interac.

Key Retail Banks and Issuers
The retail banking market in Canada is dominated by the Big Five: RBC (Royal Bank of Canada), TD (TorontoDominion Bank), Scotiabank, CIBC (Canadian Imperial Bank of
Commerce) and BMO (Bank of Montreal). RBC is the largest in terms of total asset size. At the end of 2020, a total of 83 banks were operating in the country.

Acquiring and Processing
The merchant acquiring market in Canada is relatively concentrated, with the top four acquirers sharing over 90% of the market. The dominant quartet is Moneris Solutions, Global Payments, Chase Merchant Services and TD Merchant Services.

Online Acquiring
Canada has a high internet penetration rate of over 90% and the e-commerce market is constantly growing. Verisk Financial Research estimates that around $107 billion was spent with cards at online merchants in Canada in 2020.

Regulatory and Markets Information
In Canada, supervisory responsibility for the financial sector is divided between the federal government, provincial governments and national self-regulatory organisations.

Canada Payments Report | Entities Referenced

Aeroplan
Aimia
Air Canada
American Express
Ameublements Tanguay
Amex Bank of Canada
Amex Canada
Apple
Bambora
Bank of Canada
Bank of Montreal
Beanstream
Best Buy
Bluefin
BluePay
BMO
BoC
Braintree
Brault & Martineau
British Airways
Canada Deposit Insurance Corporation
Canada Mortgage and Housing Corporation
Canadian Association of University Teachers
Canadian Bar Association
Canadian Federation of Independent Business
Canadian Imperial Bank of Commerce
Canadian Nurses' Association
Canadian Payments Association
Canadian Tire Bank
Canadian Tire Financial Services
Capital One
Cathay Pacific
CDIC
CFIB
Chase Merchant Services
Chase Paymentech
CIBC
CMHC
Costco
CTFS
Cybersource
Desjardins
Discover
Dream Payments
EconoMax
Elavon
Esso
E-xact Transactions
FairFax Financial
FCAC
Financial Consumer Agency of Canada
Financial Institutions Supervisory Committee
First Data
First Ontario Credit Union
FISC
Fiserv
Future Shop
Global Payments
Goldman Sachs
Google
Home Depot
HSBC
Interac
JCB
JPMorgan Chase
Lowe's
Mastercard
MBNA
MBNA Canada
Meridian Credit Union
Mobeewave
Moneris Solutions
National Bank
National Bank of Canada
National Data Corporation
National Hockey League
NBC
Nova Information Systems
Office of the Superintendent of Financial Institutions
OSFI
Patrick Morin
Payments Canada
President's Choice Financial
Presidents Choice
RBC
Reno Depot
Restaurants Canada
Retail Council of Canada
Rona
Royal Bank of Canada
Samsung
Scotiabank
Square
Staples
Starbucks
Stripe
TD
TD Merchant Services
The Bay
The Source
Toronto-Dominion Bank
TSYS
UnionPay
University of Ottawa
University of Toronto
US Bancorp
Visa
Walmart
Western Union
WestJet Airlines

MORE NORTH AMERICA PAYMENTS REPORTS

Verisk Financial Research reports deliver market and competitor intelligence on payments cards, e-money, acquiring/processing, retail banking, and consumer credit in North America. Researchers use primary and secondary source data and conduct in-depth interviews with senior industry executives and North American experts.

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