The Cards and Payments Industry in Canada: Emerging Trends and Opportunities to 2019

Canada has long been an established, modern, efficient and well-developed payments cards market. The market comprises debit, credit and charge cards, and Canadian consumers are among the heaviest users of payment cards in the world, with a card penetration rate of 3.8 cards per individual in comparison to other mature markets, such as the UK (2.5), Germany (1.7) and France (1.3).

The traditional notions of a payments card market, which revolve around payment networks, financial institutions and payment processors, have evolved. The range of non-traditional competitors continues to expand, as does the range of businesses and technology through which payment services are delivered to consumers and merchants.

Canada’s acceptance of contactless technology has led to the introduction of virtual wallets by both financial and non-financial companies. Examples include the Google Wallet launched in 2011, the Suretap mobile wallet in 2013 and LoopWallet in 2014.

Debit cards are an important part of Canada’s payment cards market, and according to the Canadian Bankers Association (CBA) statistics released in October 2014, 94% of the total population has a debit card. In 2014, almost 34% of all transactions at POS terminals in Canada were settled by a debit card.

The competitive landscape has gradually started to change, and Interac’s dominant position could be challenged. Visa entered the debit cards market in October 2010, with the launch of CIBC’s Advantage debit card. Furthermore, MasterCard announced plans intentions to launch debit cards in mid-2015. International scheme providers will also take advantage of the fact that all POS terminals support EMV-compliant cards.

The Canadian credit cards market is concentrated in terms of transaction value, with the five leading issuers dominating market share in 2014. In Canada, credit cards are typically issued by banks, credit unions, monoline card issuers and retailers. Banks have implemented marketing strategies such as offering insurance cover, reward points, cashback, discounts, and customized products to encourage consumers to use credit cards at POS terminals.

Scope

• Analysis of the key economic, infrastructural and business drivers affecting the Canadian cards and payments industry.

• A comprehensive analysis of consumer attitudes and buying preferences for cards.

• Detailed insights into payment instruments, including: check payments, credit transfers, direct debits, payment cards and cash transactions.

• An overview of Canada’s key alternative payment instruments.

• Current values for the industry for 2014, and forecast figures to 2019.

• An outline of the current regulatory framework in the industry.

• Insight on the marketing strategies adopted by various banks and other financial institutions.

• Profiles of major banks in the industry.

Key Highlights

What has been the key strategy of Canada in regard to technological progress in the cards and payments industry? What has this meant for the development of the infrastructure of the cards and payments industry and the associated advantages for consumers?

What is likely to encourage innovation and competition in the industry in the near future?

What changes are anticipated in the Canadian credit cards market over the forecast period? What is the driver of this change and what are its core aims?

Which market initiative is considered as having a negative effect on the Canadian Credit Card category? How far is the related upheaval in the industry set to extend throughout the forecast period?

Reasons to buy

• Make strategic business decisions in each category of Canada's cards and payments industry, utilizing GlobalData’s top-level historic and forecast market data.

• Identify the key market trends and growth opportunities in the industry, and align your strategy to those which offer you the best opportunity to grow your market share.

• Analyze the marketing strategies used for selling various card types in Canada and apply those that are successful to your product portfolio.

• Assess the key regulations governing the industry, and address those which may have a negative effect on your revenues.

Companies mentioned

Royal Bank of Canada

TD Canada Trust

CIBC

Bank of Montreal

Scotiabank

Interac

American Express

Visa

MasterCard

Table of Contents

1 Definitions and Methodology

1.1 Definitions

1.2 Methodology

2 Key Facts and Events

3 Executive Summary

4 Payment Instruments

4.1 Current Payment Environment

4.2 Alternative Payment Instruments

4.2.1 Mobile payments

4.2.2 PayPal

4.2.3 Interac Online

4.2.4 Zoompass

4.2.5 Ugo wallet

4.2.6 Suretap wallet

4.2.7 LoopWallet

4.2.8 Safetypay

4.2.9 Apple Pay

5 Regulations in the Cards and Payments Industry

5.1 Regulatory Framework

5.1.1 Regulations pertaining to cards

5.2 Anti-Money Laundering (AML)

5.3 Foreign Direct Investment (FDI) Regulations

6 Analysis of Cards and Payments Industry Drivers

6.1 Demographic Drivers

6.2 Economic Drivers

6.3 Infrastructure Drivers

6.4 Business Drivers

7 Market Segmentation and New Product Launches

7.1 Market Segmentation and Targeting

7.1.1 Consumer cards

7.1.2 Commercial cards

7.2 New Product Launches

8 Payment Cards

8.1 Payment Cards Analysis

8.1.1 Volume and value of payment card transactions by type

8.1.2 Personal vs commercial cards

9 Debit Cards

9.1 Debit Cards Market Analysis

9.1.1 Debit card transaction volumes and values by channel

9.1.2 Debit card scheme shares in terms of the volume and value

9.1.3 Debit cards issuers’ market shares

9.1.4 Debit cards comparison

10 Credit Cards

10.1 Credit Cards Market Analysis

10.1.1 Credit card transaction volumes and values by channel

10.1.2 Credit card scheme shares in terms of number of cards in circulation and transaction value

10.1.3 Credit cards issuers’ market shares

10.1.4 Credit cards comparison

11 Charge Cards

11.1 Charge Cards Market Analysis

11.1.1 Charge card transaction volumes and values by channel

11.1.2 Charge card scheme shares in terms of number of cards in circulation and transaction value

11.1.3 Charge cards comparison

12 Commercial Cards

12.1 Commercial Cards Market Analysis

12.1.1 Commercial cards comparison

13 Card Fraud Statistics

13.1 Card Fraud Analysis

14 Card Issuers

14.1 Royal Bank of Canada

14.2 TD Canada Trust

14.3 CIBC

14.4 Bank of Montreal

14.5 Scotiabank

14.6 American Express

15 Prepaid Cards

15.1 Prepaid Cards Market Analysis

15.1.1 Prepaid cards comparison

16 Merchant Acquiring

16.1 Merchant Acquiring Market Analysis

17 Appendix

17.1 Tables

17.2 Contact GlobalData

17.3 About GlobalData

17.4 GlobalData’s Services

17.5 Disclaimer

List of Tables

Table 1: Key Definitions

Table 2: Annual Average Exchange Rate

Table 3: Canada – Key Facts, 2014

Table 4: Regional Benchmarking of Canadian Payment Cards, 2014

Table 5: Canada – Mode of Entry of Foreign Banks

Table 6: Cards for High-Income Consumers, 2015

Table 7: Cards for Travelers, 2015

Table 8: Cards for Students and the Young Population, 2015

Table 9: Cashback Credit Cards, 2015

Table 10: Shopping Reward Point Credit Cards, 2015

Table 11: Commercial Cards Comparison and Key Features, 2015

Table 12: Canada – New Product Launches

Table 13: Canada – Pay Now, Average Interchange Fees: Intra-Network Transactions (%), 2010–2014

Table 14: Canada – Pay Now, Average Merchant Service Charge: Domestic Transactions (%), 2010–2019

Table 15: Canada – Debit Cards Comparison and Key Features, 2015

Table 16: Canada – Pay Later, Average Interchange Fees: Intra-Network Transactions (%), 2010–2014

Table 17: Canada – Pay Later, Average Merchant Service Charge: Domestic Transactions (%), 2010–2019

Table 18: Canada – Gold Credit Cards Comparison and Key Features, 2014

Table 19: Canada – Premium Credit Cards Comparison and Key Features, 2015

Table 20: Canada – Charge Cards Comparison and Key Features, 2015

Table 21: Canada – Commercial Cards Comparison and Key Features, 2015

Table 22: Canada – Prepaid Cards Comparison and Key Features, 2015

Table 23: Canada – Payment Instrument Transaction Values (CAD Billion), 2010–2014

Table 24: Canada – Payment Instrument Transaction Values (US$ Billion), 2010–2014

Table 25: Canada – Payment Instrument Transaction Volumes (Million), 2010–2014

Table 26: Canada – Number of Payment Cards in Circulation by Type (Million), 2010–2019

Table 27: Canada – Volume of Payment Card Transactions by Type (Million), 2010–2019

Table 28: Canada – Value of Payment Card Transactions by Type (CAD Billion), 2010–2019

Table 29: Canada – Value of Payment Card Transactions by Type (US$ Billion), 2010–2019

Table 30: Canada – Personal and Commercial Card Transaction Volumes ( Million), 2010–2019

Table 31: Canada – Personal and Commercial Card Transaction Values (CAD Billion), 2010–2019

Table 32: Canada – Personal and Commercial Card Transaction Values (US$ Billion), 2010–2019

Table 33: Canada – Number of Debit Cards in Circulation (Million), 2010–2019

Table 34: Canada – Debit Card Transaction Volumes and Frequency by Channel, 2010–2019

Table 35: Canada – Debit Card Total and Average Transaction Values by Channel, 2010–2019

Table 36: Canada – Debit Card Total and Average Transaction Values by Channel, 2010–2019

Table 37: Canada – Number of Debit Cards in Circulation by Scheme (Million), 2010–2014

Table 38: Canada – Debit Card Transaction Values by Scheme (CAD Billion), 2010–2014

Table 39: Canada – Debit Card Transaction Values by Scheme (US$ Billion), 2010–2014

Table 40: Canada – Debit Card Transaction Values by Issuer (CAD Billion), 2010–2014

Table 41: Canada – Debit Card Transaction Values by Issuer (US$ Billion), 2010–2014

Table 42: Canada – Number of Credit Cards in Circulation (Million), 2010–2019

Table 43: Canada – Credit Card Transaction Volumes and Frequency by Channel, 2010–2019

Table 44: Canada – Credit Card Total and Average Transaction Values by Channel, 2010–2019

Table 45: Canada – Credit Card Total and Average Transaction Values by Channel, 2010–2019

Table 46: Canada – Number of Credit Cards in Circulation by Scheme (Million), 2010–2014

Table 47: Canada – Credit Card Transaction Values by Scheme (CAD Billion), 2010–2014

Table 48: Canada – Credit Card Transaction Values by Scheme (US$ Billion), 2010–2014

Table 49: Canada – Credit Card Transaction Values by Issuer (CAD Billion), 2010–2014

Table 50: Canada – Credit Card Transaction Values by Issuer (US$ Billion), 2010–2014

Table 51: Canada – Credit Card Balances Outstanding by Issuer (CAD Billion), 2010–2014

Table 52: Canada – Credit Card Balances Outstanding by Issuer (US$ Billion), 2010–2014

Table 53: Canada – Number of Charge Cards in Circulation (Million), 2010–2019

Table 54: Canada – Charge Card Transaction Volumes and Frequency by Channel, 2010–2019

Table 55: Canada – Charge Card Total and Average Transaction Values by Channel, 2010–2019

Table 56: Canada – Charge Card Total and Average Transaction Values by Channel, 2010–2019

Table 57: Canada – Number of Charge Cards in Circulation by Scheme (Thousand), 2010–2014

Table 58: Canada – Charge Card Transaction Values by Scheme (CAD Billion), 2010–2014

Table 59: Canada – Charge Card Transaction Values by Scheme (US$ Billion), 2010–2014

Table 60: Canada – Number of Commercial Cards in Circulation (Million), 2010–2019

Table 61: Canada – Commercial Cards Transaction Value (CAD Billion), 2010–2019

Table 62: Canada – Commercial Card Transaction Values (US$ Billion), 2010–2019

Table 63: Canada – Card Fraud (CAD Million), 2010–2014

Table 64: Canada – Card Fraud (US$ Million), 2010–2014

Table 65: Canada – Number of Prepaid Cards in Circulation (Billion), 2010–2019

Table 66: Canada – Prepaid Card Transaction Values (CAD Million), 2010–2019

Table 67: Canada – Prepaid Card Transaction Values (US$ Million), 2010–2019

Table 68: Canada – Merchant Acquirers’ Transaction Volume by Card Type (Billion), 2010–2019

Table 69: Canada – Merchant Acquirers’ Total Transaction Value (CAD Billion), 2010–2019

Table 70: Canada – Merchant Acquirers’ Total Transaction Value (US$ Billion), 2010–2019

Table 71: Canada – Merchant Acquirers’ Transaction Value (CAD Billion), 2010–2014

Table 72: Canada – Merchant Acquirers’ Transaction Value (US$ Billion), 2010–2014

Table 73: Canada – Retail Outlets and Merchant Accounts (Million), 2010–2019

List of Figures

Figure 1: Canada – Payment Instrument Shares by Transaction Value (%), 2010 and 2014

Figure 2: Canada – Payment Instrument Shares by Transaction Volume (%), 2010 and 2014

Figure 3: Canada – Total Population and Structure, 2014

Figure 4: Canada – Internet and Mobile Penetration (Users per 100 Inhabitants), 2010–2019

Figure 5: Canada – Economic Indicators, 2010–2019

Figure 6: Canada – Number of ATMs, POS Terminals and Commercial Bank Branches, 2015

Figure 7: Canada – Household Final Consumption Expenditure and Retail Sales, 2010–2014

Figure 8: Canada – E-Commerce Value (US$ Billion), 2010–2019

Figure 9: Canada – Outbound and Inbound Trips Volume and Spending, 2010–2019

Figure 10: Canada – Cards and Payments Industry Segmentation by Card Type, 2015

Figure 11: Canada – Growth in Payment Cards Transaction Value and Number of Cards in Circulation by Type, 2010–2019

Figure 12: Canada – Volume and Value of Payment Card Transactions by Type (%), 2010–2019

Figure 13: Canada – Personal and Commercial Cards, Transaction Volume and Value (%), 2010–2019

Figure 14: Canada – Growth in Debit Cards Transaction Value and Number of Debit Cards in Circulation, 2010–2019

Figure 15: Canada – Debit Card Transaction Volumes and Values by Channel, 2010–2019

Figure 16: Canada – Debit Cards Issuers’ Market Shares in Terms of Transaction Value (%), 2014

Figure 17: Canada – Growth in Credit Card Transaction Values and Number of Credit Cards in Circulation, 2010–2019

Figure 18: Canada – Credit Card Transaction Volumes and Values by Channel, 2010–2019

Figure 19: Canada – Credit Card Scheme Shares in Terms of Number of Cards in Circulation and Transaction Value (%), 2014

Figure 20: Canada – Credit Cards Issuers’ Market Share in Terms of Transaction Value (%), 2014

Figure 21: Canada – Credit Cards Issuers’ Market Share in Terms of Outstanding Balance (%), 2014

Figure 22: Canada – Growth in Charge Cards Transaction Value and Number of Credit Cards in Circulation, 2010–2019

Figure 23: Canada – Charge Card Transaction Volumes and Values by Channel, 2010–2019

Figure 24: Canada – Charge Card Scheme Shares in Terms of Number of Cards in Circulation and Transaction Value (%), 2014

Figure 25: Canada – Number of Commercial Cards in Circulation and Transaction Value, 2010–2019

Figure 26: Canada – Shares of Various Types of Card Fraud in Terms of Transaction Value (%), 2010 and 2014

Figure 27: Canada – Number of Prepaid Cards in Circulation and Transaction Value, 2010–2019

Figure 28: Canada – Merchant Acquiring Transaction Volume and Value, 2010–2019

Figure 29: Canada – Merchant Acquirers’ Market Shares in Terms of Transaction Value (%), 2014

Figure 30: Canada – Number of Retail Outlets and Total Merchant Accounts (Thousand), 2010–2019

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