Canadians Love Their Credit Cards – But are Embracing Newer Payment Methods as Well

Canadians Love Their Credit Cards – But are Embracing Newer Payment Methods as Well

Canadians Love Their Credit Cards – But are Embracing Newer Payment Methods as Well

Gavin Rosenberg

Gavin Rosenberg

Gavin Rosenberg is senior director, product marketing, global product innovation at TSYS. In this role, Rosenberg leads the development and execution of product positioning, marketing and communications strategies for TSYS issuing products and services.

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The payments industry's rapid transformation has been driven by new technologies, an expanding array of providers and evolving regulations. In Canada, where a vital economy and vibrant culture reflect its close proximity to the United States, consumers have embraced many of the new payment offerings. Yet, through it all, one fact has remained constant — Canadian consumers love their credit and debit cards.

However, the TSYS 2017 Canadian Consumer Payment Study, conducted by TSYS, found that newer payment methods, features and capabilities are quickly gaining ground.

According to the study, 44 percent of Canadian consumers prefer to pay with a credit card, compared with 38 percent who choose debit and just 13 percent who opt for cash. Credit’s narrow, but significant, lead over debit has barely budged over the past three years, for reasons that include consumers' affinity for the attractive rewards programs that often accompany credit card offerings, plus a strong perception that credit cards are safer than other alternatives for both in-store and online purchases.

Canadian consumers prefer credit cards more than debit cards or cash

However, the TSYS 2017 Canadian Consumer Payment Study, conducted by TSYS, found that newer payment methods, features and capabilities are quickly gaining ground.

Among the youngest survey responders, the table is turned — with 18- to 24-year-olds preferring debit to credit cards by a large margin (48 percent versus 31 percent). And those with modest incomes are more likely to choose debit over credit as well (by 5 percent for annual incomes of $25,000–$50,000 and by 17 percent for those making less than $25,000 a year) to better manage their spending.

New ways to pay

Beyond debit and credit cards, checks and cash, many Canadians are also enthusiastically taking advantage of some of the newest ways to pay.

P2P
Although cash remains favored as the way to pay individuals by a four-to-one margin over checks or debit cards, for the first time, the survey asked Canadian consumers about person-to-person (P2P) payments. Aided by the wide availability of Canada’s Interac e-Transfer system, nearly half of the respondents (48 percent) said they had used a P2P service, and another 31 percent were aware of its availability but hadn’t yet tried it.

Contactless
Even when consumers stick to traditional credit and debit for purchases, Canadians are clearly open to using the latest capabilities available. Nearly nine out of ten (89 percent) were aware that many cards have a contactless feature that enables consumers to make in-store purchases by tapping their cards on a merchant terminal as opposed to inserting them. In addition, almost eight in ten (79 percent) of those who knew about the feature have tapped into this convenience by paying this way.

Mobile
But perhaps one of the most eye-opening results from the survey was the high expectation Canadian consumers have for the role that mobile phones will soon be playing in payments.

Survey respondents were first asked to rank their interest in a list of mobile capabilities. In almost every area, interest had grown over the previous two years of the study — and, in some cases, by significant amounts. This list included:

  • Use your mobile phone to immediately stop an unauthorized transaction
  • Instantly view transactions made with your debit or credit card
  • Keep all loyalty/reward cards on your mobile phone so you’ll always have the right card when making in-store purchases
  • Use your phone to turn a payment card on or off to protect against unauthorized purchases
  • Use your phone to transfer money to a friend or family member
  • Use a mobile app to change the personal identification number (PIN) on your debit or credit card
  • Receive instant offers and promotions while in store
  • Store government-issued identification, such as a driver's license, on the phone

Purpose/Action

One of the most unexpected results was that while few respondents (five percent — up just two points from 2016) had loaded credit card information on their mobile phones, fully half of Canadian consumers expect that they will be using their mobile phones to make at least 25 percent of their in-store purchases within the next two years. And 30 percent of the respondents believe they'll make at least 50 percent of their purchases with their phone over that same period.

Resolving issues through personal contact

Even with the growing adoption of online interactions, consumers still overwhelmingly prefer to resolve any payment card issues that arise by talking with a real person (87 percent). Calling customer service was the top choice (66 percent) for survey respondents, with walking into a branch a distant second (21 percent) and only a handful (8 percent) of people comfortable trying to deal with a problem via email.

Quite surprisingly, even tech-savvy Generation Z-ers between the ages of 18 and 24 had a high propensity to visit a branch to resolve an issue with a payment card. This option was still a distant second to calling customer service — but an in-person branch visit was strongly preferred over the use of more 'techy' options like email, chat, a mobile app or social media.

Canadian consumers prefer to speak to someone directly

Ease of omnichannel

Time and again, the Canadian study's results pointed to the fact that emerging channels such as mobile aren't replacing old channels. Rather, they're offering consumers more choice in how to interact with their financial institutions. For example, 44 percent of survey respondents now use a mobile app to access their account details once a month or more. However, more than four in five still use PCs and nearly two-thirds visit a branch at least once per month.

The study illustrates that the key for financial institutions is to make the same information securely available and offer an expanding number of ways to pay across multiple channels — while ensuring that the consumer's experience is consistent regardless of channel. This will meet consumer expectations of getting what they want when, where and how they want it — resulting in loyal and satisfied customers.

To access a full copy of the complimentary TSYS study, please visit https://www.tsys.com/2017canadianconsumerstudy.

The statements and opinions of the writer do not necessarily reflect those of TSYS.

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Gavin Rosenberg

Gavin Rosenberg is senior director, product marketing, global product innovation at TSYS. In this role, Rosenberg leads the development and execution of product positioning, marketing and communications strategies for TSYS issuing products and services.

Prior to joining TSYS, he served as vice president of product and program marketing at Elavon, where he was responsible for go-to-market, marketing and communications strategies for their acquiring and point-of-sale products and services. Rosenberg has more than 20 years of experience in various marketing and business development roles in the banking and payments industries, working for institutions that include US Bank, First Data, SouthTrust Bank and Elavon.

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