Canada reaches $11.9 trillion in retail payment transactions with 21.7 billion transactions in 2023, up 6% year-over-year

Key report highlights:

• Digital payments represented 86% of total payment volume and 75% of total payment value.
• Cash use increased by 15% year-over-year by volume of transactions.
• Contactless payments accounted for 53% of payments.
• E-commerce transactions totalled $71.6 billion, representing 5.7% of retail sales, up 5.5% year-over-year.
• Prepaid cards showed the greatest growth in transaction value among cards.
• Online transfers surpassed cheques by volume for business payments for the first time.
• More than 1 in 10 Canadians (13%) used smart home devices (for example, Alexa/Amazon, Google Home) or social media to make purchases.
• One in five Canadians (20%) sent money abroad; up 33% year-over-year.
• Around half (49%) of Canadian businesses plan to use generative artificial intelligence to improve operations.

OTTAWA, ON, Oct. 2, 2024 /CNW/ - Payments Canada today released its annual Canadian Payment Methods and Trends Report, Fuelling the future of payments through choice, which analyzes the 21.7 billion retail payment transactions made in 2023, totalling $11.9 trillion. The report reveals that the Canadian payment market grew by 6% in volume and 1% in value from 2022 to 2023, and explores payment behaviours and the future innovations that will evolve the way Canadians pay and get paid. When it comes to payment methods, credit cards represented 33% of payment volume in 2023, followed by debit cards (30%); electronic funds transfer (15%); cash (11%); online transfer (6%); cheque, automated banking machine (ABM) and prepaid cards (all at 2%). 

"This is an exciting time for payment innovation in Canada, fuelled by Canadians' desire for payment options that make their lives easier," said Susan Hawkins, President and CEO of Payments Canada. "Evolving technologies, regulations and the continued modernization of our payment systems mean that Canadian consumers and businesses will have even more payment choices. No matter what Canadians' payment preferences are, through the continued safe operation of our systems and the development and enhancement of our rules, standards and by-laws, Payments Canada works to ensure payments are easier, smarter and safer for everyone."

Key year-over-year payment method trends (2022-2023):

Credit and debit card usage leads payment volume. Credit and debit cards remained the leading two payment methods of choice. Combined, credit cards (33%) and debit cards (30%), made up 63% of total payment volume. Electronic funds transfer (EFT) represents 15% of payment volume, followed by cash at 11%, online transfer at 6%, in addition to prepaid, ABM and cheque each at 2%.

Prepaid cards showed the greatest transaction value growth among cards at 10%. Canadians report using prepaid cards to make payments quickly, to receive discounts/loyalty rewards and to use their own funds. The average prepaid transaction value was $69.

Online transfers (such as Interac e-Transfer and PayPal) volume and value grew by 14% and 20% respectively as the fastest-growing payment type. For the first time ever, online transfer usage surpassed cheques based on volume for business payments.

Cash transaction volume increased by 15% while transaction value increased by 4%. The average cash transaction value was $26, slightly lower than 2022 at $29. Almost half of all Canadians (49%) frequently used cash in 2023.

Key five-year payment method trends (2019-2023):  

Online transfers experienced significant growth. While online transfers make up a relatively small proportion of total payments, they had the highest volume and value growth of any payment method over the past five years (136% and 160% respectively).

Growth and trends among other payment methods over the past five years:

• Within the cards space, credit (9%) and prepaid (7%) lead volume growth, with 42% and 24% growth in value respectively.
• EFT value has continued to grow, up 8% in volume and 40% in value.
• Cheques have declined by -35% in volume and -20% in value of transactions.
• Cash was down -20% in volume and -4% in value of transactions.

The Canadian Payment Methods and Trends Report reveals how payment innovation has evolved purchasing behaviours and preferences:  

Half of Canadian businesses plan to use generative artificial intelligence (GenAI). Around one in two businesses (49%) intend to use GenAI to make their operations and processes more efficient. The top three GenAI applications perceived to benefit businesses most are fraud detection and prevention (44%), automating payment processing (37%) and creating personalized customer experiences (29%).

More than 1 in 10 Canadians use smart home devices and social media to make purchases. Overall, 13% of Canadians used smart devices or social media for placing an online order or initiating a payment in a given month in 2023, up slightly from 11% in 2022. This included through Alexa/Amazon, Google Home, Instagram, Facebook and Apple Siri.

Wearables, such as fitness trackers and smartwatches, were used to initiate 44 million payment transactions. Wearable transactions totalled $1.1 billion in 2023. Although this represented less than 1% of total contactless transaction volume and value in 2023, wearables usage for payment increased by 32% in volume and 34% in value from 2022. Credit card contactless (includes tap-to-pay by card or mobile device) make up the largest proportion of contactless transaction volume at 57%. In-store mobile contactless payments increased by 42%, representing 23% of total contactless transaction volume.

One in five (20%) Canadians sent money internationally at least once; up 33% from 2022. The total average value of payments sent to individuals internationally in a given month in 2023 was $1,125 compared to $1,231 sent to businesses internationally. Extra/hidden fees (26%) and the high cost of each transaction (23%) were cited as the biggest pain points for sending money internationally. 

Canadian e-commerce grew to $71.6 billion. In 2023, e-commerce payments totalled 546 million transactions, up 3% in both volume and value from 2022. The top categories of online purchases included clothing, restaurants/fast food, groceries, electronics and personal beauty products. Travel and entertainment events continued to experience strong year-over-year growth, following the resumption of pre-pandemic economic activity in 2022.

Majority of Canadians have no desire to go cashless with mixed views on a digital Canadian dollar. More than half (55%) of Canadians have no desire to completely stop using cash, while 13% of Canadians have gone completely cashless. More than a third (36%) of Canadians find a digital Canadian dollar appealing, while 30% do not.

One in ten Canadians own cryptocurrency in 2023, down from 13% in 2022. The majority (61%) of owners reported their assets to be valued at under $20,000, followed by 23% who held amounts between $20,000 to $99,999 and 14% over $100,000. The primary motivator for purchasing cryptocurrency was cited as being tied to speculative investment or gambling (28%), seeking higher returns compared to traditional savings accounts (22%), being perceived as a long-term investment due to faith in its technology (20%), diversifying portfolios or assets (20%) and for buying goods and services (13%).

"Canadians have made it clear that when it comes to payments, convenience, efficiency, security, privacy and low cost are vital to them," said Jon Purther, Director of Research at Payments Canada. "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."

Download the full report and view the accompanying fact sheet.

About the study
Payments Canada worked closely with payment service providers, payment consultants and researchers to compile a comprehensive 2023 data set and provide insights into how Canadian consumers and businesses pay. The general methodology involves combining industry data and market research. Industry data is derived primarily from the Automated Clearing Settlement System (ACSS) data, industry payment card usage data and quantitative and qualitative market research sources. Data is also collected from payment service providers and payment networks on an aggregated annual basis, based on actual payment instrument usage data. Survey research is used to fill data gaps and provide detailed insights. Lynx transactions are excluded to avoid double counting as the payment volume and value information in this report are derived from the clearing data.

About Payments Canada

Payments Canada makes payments easier, smarter and safer for people living in Canada by providing secure and resilient infrastructure where payments are cleared and settled between financial institutions. We are a public purpose organization that owns and operates Canada's payment systems, Lynx and the Automated Clearing Settlement System (ACSS), and are responsible for the by-laws, rules and standards that support these systems. In 2023, our Lynx and ACSS systems cleared and settled over $112 trillion — more than $450 billion every business day. Some of the transactions that pass through our systems include debit card payments, pre-authorized debits, direct deposits, bill payments, wire payments and cheques. Payments are an essential part of our economy and way of life. From a down payment on a home, an invoice paid to a local business or a first paycheque — payments keep Canadians and the economy moving forward.

For media inquiries, please visit Payments Canada's media centre.

SOURCE Payments Canada