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How Contactless Transaction Volumes Have Grown Significantly in Canada Over the Course of the Pandemic

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The COVID-19 pandemic of the past year has dramatically shifted consumer behaviour with more Canadians shopping online and, for those venturing out, contactless payment methods have become a more popular choice for people.

A survey by Moneris discovered that contactless transaction volumes in Canada grew by 32 percent across credit and debit cards year over year by the third quarter of 2020.

By the end of the year, contactless payments, which saw limits increase to $250 for tap payments, represented about 60 percent of overall transactions. The increase was due to people being aware of health and safety protocols and not wanting to touch screens. Also tap payments can be done in a quicker time at checkout, leading to less lineups.

Peter Goldsztajn, Director of Corporate Data Analytics for Moneris, said significant shifts in consumer behaviour have taken place in the past year around where and how consumers are spending.

“There’s clear evidence of a substitution effect essentially. People are not travelling so they’re spending or they’re not able to go and entertain themselves at bars and entertainment venues so they’re spending more time on home and leisure. That’s been a pattern that’s been evolving the whole year and actually continues as we move into 2021,” he said.

With several businesses closed to in-person shopping, Canadians shopped online more frequently. When Canadians did shop in-store, they were more likely to use contactless payment and made fewer shopping trips, spending more per visit than they did prior to the pandemic. The average transaction size grew 11.7 percent in April following lockdown measures and a limit increase to $250 for tap payments.

“There was a bit of a stockpiling effect at the beginning of the year, particularly March and April when lockdowns first started. People are travelling less to their venues or their merchants. Less frequent transactions but at higher amounts,” said Goldsztajn. I think the reason behind that is people just don’t want to be exposed as much. Perhaps there’s also limitations on where people could shop. There was a lot of hoarding going on in the beginning. I like to call it a stockpiling effect.

“We saw that trend actually go throughout the year.”

The trend in e-commerce continues, added Goldsztajn, with about a 30 per cent increase in sales in the fourth quarter of 2020.

“E-comm generally speaking is being influenced by the fact you don’t have a lot of options in a lot of cases. But there’s a sentiment evolving that we can see. People are shopping more local.”

He said the shop local trend will likely continue to grow.

Here are some of the key recent survey results from Moneris on shopping trends in Canada in the past year as consumers and merchants navigated the choppy economic waters caused by the COVID-19 pandemic:

  • In April 2020, spending dropped by 32 percent (the lowest transaction volume of the year) but recovered quickly, achieving a negative growth of -0.9 percent by September. Canadians predominantly spent their money at grocery stores on toilet paper and pantry items, as they were making more meals at home due to restaurant closures;
  • From June to September 2020, the travel and hospitality industries were tremendously impacted by the pandemic, with a nearly 62 percent decrease in spending volumes. From June to September, the loosening of domestic restrictions caused a shift in spending behaviour; money Canadians had allocated to international travel was instead spent on home improvements and outdoor recreation. Golf course volumes increased by 20 percent compared to last year; Bicycle shop volumes increased by 21 percent; Swimming pool sales saw a volume increase of 51 percent; The volumes of home supply and warehouse stores increased by 31 percent; and hardware store volumes increased by 13 percent;
  • While the summer months saw an increase in spending on outdoor recreation, the cooler temperatures that arrived in October prompted Canadians to spend on indoor home improvements. With more time spent inside and limits on travel, Canadians continued to spend their travel money on their homes. The household category dominated in the fall with a nearly 20 percent increase in volumes compared to fall of 2019; Fireplace stores saw a 22 percent increase in volume in October; Household appliance volumes increased by 27 percent; Furniture and home furnishing volumes increased by 20 percent;
  • Black Friday was the busiest shopping day of the year, as Canadians purchased gifts for friends and family leading up to the holidays. Moneris processed a high of nearly 550 transactions per second during its peak time of the day, approximately 100 transactions per second less than pre-pandemic levels; and
  • The New Year brought a negative 17 percent volume growth, caused by a combination of limited post-holiday spending and increased pandemic restrictions. As spending started to pick up, trends from January 2021 indicate that Canadians were preparing for a summer in lockdown. Boat rental and lease volumes increased by 227 percent compared to January 2020; Bicycle shop sales increased by 87 percent; Swimming pool volumes increased by 80 percent; Recreational and utility trailer sales increased by 68 percent.

Article Author

Mario Toneguzzi
Mario Toneguzzi, based in Calgary, has more than 40 years experience as a daily newspaper writer, columnist, and editor. He worked for 35 years at the Calgary Herald covering sports, crime, politics, health, faith, city and breaking news, and business. He is the Senior National Business Journalist with Retail Insider in addition to working on his own as a freelance writer and consultant in communications and media relations/training.

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