Payments Canada has released its Canadian Payment Methods and Trends Report for 2024, revealing insights into the ongoing transformation of the Canadian payment landscape.
The report, which analyzes over 21.7 billion retail payment transactions amounting to $11.9 trillion in 2023, highlights an overall growth in payment volume and the increasing adoption of digital payment methods across Canada. The data reflects a 6% rise in transaction volume and a modest 1% increase in transaction value compared to the previous year, emphasizing Canadians’ preference for more convenient and tech-driven payment options.
According to the report, digital payments now make up an overwhelming 86% of total payment volume, with contactless payments accounting for 53% of transactions in 2023. Meanwhile, cash usage, though still declining in the long term, saw an unexpected increase in 2023, with a 15% rise in transaction volume compared to 2022.
Susan Hawkins, President and CEO of Payments Canada, said, “This is an exciting time for payment innovation in Canada, fuelled by Canadians’ desire for payment options that make their lives easier,” Hawkins noted. “Evolving technologies, regulations, and the modernization of our payment systems will continue to expand the options available to consumers and businesses alike.”
Key Trends in Payment Methods
Among the notable findings, credit and debit cards maintained their dominance, representing 63% of total payment volume in 2023, with credit cards accounting for 33% and debit cards for 30%. Meanwhile, prepaid cards emerged as the fastest-growing payment option, seeing a 10% rise in transaction value. Canadians increasingly prefer prepaid cards for quick payments, loyalty rewards, and spending control.
Online transfers such as Interac e-Transfers and PayPal continue to gain traction, particularly in business payments, where they have now surpassed cheques in volume for the first time. In terms of growth, online transfers saw a 14% increase in volume and a 20% increase in value, solidifying their role as a preferred method for both personal and business transactions.
Interestingly, despite the rise of digital options, cash still holds a significant place in the Canadian payment ecosystem. Cash transaction volume increased by 15% year-over-year, even as its overall share of transactions continues to decline. Nearly half of Canadians (49%) reported frequent cash use in 2023, though the average cash transaction value fell slightly to $26.
E-commerce and Mobile Payments Surge
E-commerce continues to be a critical growth area in the Canadian market. Online purchases totalled $71.6 billion in 2023, representing 5.7% of all retail sales—up 5.5% from the previous year. Top categories for online purchases included clothing, restaurants, fast food, and electronics, while travel and entertainment saw notable growth as pandemic restrictions fully lifted.
Another area of significant growth was the use of wearables and smart devices for payments. In 2023, wearables such as fitness trackers and smartwatches were used for 44 million transactions, worth a total of $1.1 billion. Mobile contactless payments, including tap-to-pay via smartphones, increased by 42%, now making up 23% of all contactless payments.
For the first time, more than one in ten Canadians (13%) reported using smart home devices or social media platforms to make purchases, highlighting a growing trend toward integrating payments into everyday technology. Platforms such as Amazon Alexa, Google Home, and even social media sites like Instagram and Facebook have seen an increase in transaction activity.
International Money Transfers and Generative AI Adoption
One of the standout findings in the report was the sharp rise in international money transfers. One in five Canadians (20%) sent money abroad in 2023, a 33% increase from 2022. The average transaction value for these payments was $1,125. Despite this growth, high transaction fees and hidden charges remain significant pain points for many Canadians sending money internationally.
In addition, the report highlights the growing interest in generative artificial intelligence (GenAI) among Canadian businesses. Nearly half (49%) of businesses plan to implement GenAI to enhance operational efficiency, particularly in areas like fraud detection, automated payment processing, and personalized customer experiences.
Canadians’ Mixed Views on Cashless Society and Cryptocurrency
Despite the surge in digital payment methods, the report reveals that a majority of Canadians (55%) are not ready to go fully cashless. Additionally, there is growing interest in a potential digital Canadian dollar, with 36% of respondents expressing interest, although 30% remain opposed to the concept.
The report also sheds light on the state of cryptocurrency ownership in Canada. In 2023, only 10% of Canadians held cryptocurrency, down from 13% in 2022. The decline may be attributed to ongoing market volatility and regulatory uncertainty, though the primary drivers for holding cryptocurrency remain speculative investment and the potential for higher returns compared to traditional savings.
Jon Purther, Director of Research at Payments Canada, remarked, “Canadians have made it clear that when it comes to payments, convenience, efficiency, security, privacy, and low cost are vital to them. While we continue to see payment innovation in a digital era, Canadians also want access to legacy payment options due to their ease of use and dependability.”
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