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Canadian Consumer Payment Preferences - US - April 2013

“Mobile payments have been touted as ‘the next great thing’ for several years now, but even with the increased number of options available, adoption rates are still very low. However, as the various players in the industry begin to sort out the legal, technological and marketing issues, innovations are being announced and piloted nearly continually. The added encouragement of the increasing penetration of both smartphones and tablets mean that mobile payment opportunities for Canadian vendors and consumers are on their way.”

– Robyn Kaiserman, Financial Services Industry Analyst

Some questions answered in this report include:

  • Why aren’t consumers using mobile payments?
  • How can banks and payments brands encourage usage?

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Table of contents

  1. Scope and Themes

      • Data sources
        • Consumer survey data
          • Comperemedia
            • Abbreviations and terms
              • Abbreviations
                • Companies mentioned in this report
                • Executive Summary

                    • The market
                      • Figure 1: Canadian payments volume share, 2008 vs. 2011
                      • Figure 2: Growth in volume of payments, by payment method, 2008-11
                    • Market factors
                      • Figure 3: Unemployment rate in Canada, January 2011-February 2013
                    • Opportunities in payments
                      • Asian population offers opportunity
                        • Figure 4: Smartphone ownership, by race, February 2013
                        • Figure 5: Prepaid card usage for online purchases, by income, February 2013
                        • Figure 6: Attitudes about prepaid cards and controlling spending, by income, February 2013
                        • Figure 7: Interest in prepaid cards as a payment method alternative, by income, February 2013
                      • Challenges to new payment methods
                        • Figure 8: Consumer familiarity with payment method brands, February 2013
                        • Figure 9: Attitudes about payment methods and security, February 2013
                      • The consumer
                        • High-income consumers shop for credit cards with the best rewards program
                          • Figure 10: Reasons for shopping for credit cards, by income, February 2013
                        • The future of mobile payments lies with young people and Asians
                          • Figure 11: Interest in payment method alternatives, by age, February 2013
                          • Figure 12: Interest in payment method alternatives, by race, February 2013
                        • What we think
                        • Issues in the Market

                            • Why aren’t consumers using mobile payments?
                              • Figure 13: Reasons for not using mobile phone as a payment device, by age, December 2011-January 2012
                            • How can banks and payments brands encourage usage?
                            • Insights and Opportunities

                              • Key points
                                  • Figure 14: Smartphone ownership, by race, February 2013
                                  • Figure 15: Preferred payment methods for small everyday items, by race, February 2013
                                  • Figure 16: Interest in payment method alternatives, by race, February 2013
                                • Prepaid cards
                                  • Figure 17: Prepaid card usage for online purchases, by income, February 2013
                                  • Figure 18: Interest in using a prepaid card to control spending, by age, February 2013
                                  • Figure 19: Interest in using a prepaid card to control spending, by income, February 2013
                                  • Figure 20: Specific financial goals for the next two or three years, by age, April 2012
                                • Additional uses for NFC technology will increase use of mobile wallets
                                  • Strategic partnerships are crucial
                                  • Trend Applications

                                      • Trend: Access All Areas
                                        • Figure 21: Interest in alternative uses for mobile phones, by age, February 2102
                                      • Trend: Attention Economy
                                          • Figure 22: Reasons for shopping or applying for a credit card, by income, February 2013
                                        • Mintel Futures: East Meets West
                                            • Figure 23: Attitudes about payment method security, by race, February 2013
                                        • Market Size

                                          • Key points
                                            • Number and size of payments have increased
                                              • Figure 24: Rate of payments growth, 2008-11
                                            • Canadian payments market increased 5.3% in dollar volume
                                              • Figure 25: Canadian payments market, by dollar value, 2010-11
                                              • Figure 26: Canadian payments market, by transaction volume, 2010-11
                                            • Canada’s population is increasing
                                              • Figure 27: Canada’s population by province, 2012, 2032
                                          • Competitive Context

                                            • Key points
                                              • Payment brands largely unknown
                                                • Figure 28: Consumer familiarity with payment method brands, February 2013
                                              • NFC vs. the “cloud”
                                                • Payments industry is fragmented
                                                  • SWOT analysis of leading companies in the mobile payments industry
                                                    • RBC
                                                      • Bank of Nova Scotia
                                                        • Bank of Montreal (BMO)
                                                          • PayPal
                                                            • V.me by Visa
                                                            • Segment Performance

                                                              • Key points
                                                                • E-Wallets and prepaid cards show explosive growth
                                                                  • Figure 29: Growth in volume of payments, by payment method, 2008-11
                                                                  • Figure 30: Canadian payments volume share, 2008 vs. 2011
                                                                • Debit cards
                                                                  • Figure 31: Number of debit transactions processed by Interac, 2002-11
                                                                  • Figure 32: Total dollar value of debit transactions processed by Interac, 2002-12
                                                              • Market Drivers

                                                                • Key points
                                                                  • Unemployment is trending down
                                                                    • Figure 33: Unemployment rate in Canada, January 2011-February 2013
                                                                    • Figure 34: Number of employed people, January 2011-February 2013
                                                                  • Canadians continue to take on debt
                                                                    • Figure 35: Average consumer debt, Q4 2011-Q4 2012
                                                                  • Housing market is slowing
                                                                    • Demographics of smartphone ownership will benefit mobile payments
                                                                      • Figure 36: Smartphone ownership, by age, February 2013
                                                                  • Leading Companies

                                                                    • Key points
                                                                      • Visa leads MasterCard in total payment volume
                                                                        • Figure 37: Total debit, credit and charge payment volume in Canada for Visa and Mastercard, as of December 31, 2008-12
                                                                        • Figure 38: Credit and charge volume in Canada, Visa and MasterCard, 2008-12
                                                                        • Figure 39: Debit card volume in Canada, Visa and MasterCard, 2008-12
                                                                    • Innovations and Innovators

                                                                      • Key points
                                                                        • Rogers and CIBC partner to offer mobile payments
                                                                          • Telus announces roll-out of new payment option
                                                                            • MasterCard introduces MasterPass
                                                                              • Facebook gift cards
                                                                              • Marketing Strategies

                                                                                • Key points
                                                                                    • Figure 40: Total estimated mail volume for credit card offers, Q4 2010-Q4 2012
                                                                                  • Capital One and TD Bank Financial Group are top credit card mailers
                                                                                    • Figure 41: Top credit card acquisition mailers, January 2013
                                                                                    • Figure 42: Share of direct mail acquisition with rewards, Q4 2010-Q1 2013
                                                                                  • Points rewards are offered more than others
                                                                                    • Fee-based offers increase
                                                                                      • Figure 43: Share of fee-based card offers, Q4 2010-Q1 2013
                                                                                    • Credit and debit cards
                                                                                      • Figure 44: Capital One print ad, 2013
                                                                                      • Figure 45: TD Bank Financial Group direct mail ad, 2013
                                                                                      • Figure 46: RBC Virtual Visa direct mail ad, 2013
                                                                                      • Figure 47: RBC online ad, 2013
                                                                                      • Figure 48: Scotiabank television ad, 2013
                                                                                    • Chequing accounts
                                                                                      • Figure 49: Mechanics Bank online ad, 2012
                                                                                      • Figure 50: First calgary chequing account direct mail ad, 2013
                                                                                      • Figure 51: First Bank online ad, 2013
                                                                                    • Mobile payments
                                                                                      • Figure 52: Visa payWave print ad, 2012
                                                                                      • Figure 53: CIBC mobile payment app statement mailing, 2012
                                                                                      • Figure 54: Barclays’ Pingit online ad, 2013
                                                                                      • Figure 55: PNC Bank Virtual Wallet online ad, 2012
                                                                                  • Financial Product Ownership

                                                                                    • Key points
                                                                                      • Chequing accounts are most popular product
                                                                                        • Figure 56: Ownership of insurance and financial products, by household income, February 2013
                                                                                        • Figure 57: Ownership of insurance and financial products, by gender and age, February 2013
                                                                                    • Consumer Payment Preferences by Type of Purchase

                                                                                      • Key points
                                                                                        • Different payment methods for different transactions
                                                                                            • Figure 58: preferred payment method, by type of purchase, February 2013
                                                                                          • Purchasing small ticket items
                                                                                            • Figure 59: Preferred payment method for small everyday items, February 2013
                                                                                            • Figure 60: Preferred payment method for small everyday items, by age, February 2013
                                                                                            • Figure 61: Preferred payment method for small everyday items, by household income, February 2013
                                                                                            • Figure 62: Preferred payment method for small everyday items, by province, February 2013
                                                                                          • Purchasing medium ticket items
                                                                                            • Figure 63: Preferred payment method for medium ticket items, February 2013
                                                                                            • Figure 64: Preferred payment method for medium ticket items, by household income, February 2013
                                                                                            • Figure 65: Preferred payment method for medium ticket items, by race, February 2013
                                                                                          • Purchasing large ticket items
                                                                                            • Figure 66: Preferred payment method for large ticket items, overall, February 2013
                                                                                            • Figure 67: Preferred payment method for large ticket items, by gender and age, February 2013
                                                                                          • Payment for purchases made online
                                                                                            • Figure 68: Preferred payment method for purchases made online, overall, February 2013
                                                                                            • Figure 69: Preferred payment method for purchases made online, by age, February 2013
                                                                                          • Payment of bills
                                                                                              • Figure 70: Preferred payment method for bills such as mortgage and utilities, overall, February 2013
                                                                                              • Figure 71: Preferred payment method for bills such as mortgage and utilities, by age, February 2013
                                                                                              • Figure 72: Preferred payment method for bills such as mortgage and utilities, by race, February 2013
                                                                                            • Payment to family and friends
                                                                                              • Figure 73: Preferred payment method for money owed to family and friends, February 2013
                                                                                              • Figure 74: Preferred payment method for money owed to family and friends, be gender and age, February 2013
                                                                                          • Brand Familiarity

                                                                                            • Key points
                                                                                              • PayPal leads all brands in familiarity
                                                                                                • Figure 75: Familiarity with payments brands, by gender, February 2013
                                                                                                • Figure 76: Familiarity with payments brands, by gender and age, February 2013
                                                                                                • Figure 77: Familiarity with payments brands, by race, February 2013
                                                                                            • Credit Card Ownership and Payment Behavior

                                                                                              • Key points
                                                                                                • Most consumers have at least one credit card
                                                                                                  • Figure 78: Type of credit card owned and payment behavior, by age, February 2013
                                                                                              • Shopping for Credit Cards

                                                                                                • Key points
                                                                                                  • Reasons for shopping for credit cards
                                                                                                    • Figure 79: Reasons for applying for credit card, by age, February 2013
                                                                                                    • Figure 80: Reasons for applying for credit card, by gender and income, February 2013
                                                                                                • Attitudes toward Credit and Debit Card Usage

                                                                                                  • Key points
                                                                                                    • Credit and debit card usage preferences
                                                                                                      • Figure 81: Attitudes toward credit and usage of credit and debit cards, by household income, February 2013
                                                                                                      • Figure 82: Attitudes toward credit and usage of credit and debit cards, by gender and age, February 2013
                                                                                                  • Perceptions of Security of Various Payment Methods

                                                                                                    • Key points
                                                                                                      • Mobile phones not seen as very secure
                                                                                                        • Figure 83: Attitudes about payment method security, by gender, February 2013
                                                                                                        • Figure 84: Attitudes about payment method security, by age, February 2013
                                                                                                        • Figure 85: Attitudes about payment method security, by gender and income, February 2013
                                                                                                        • Figure 86: Attitudes about payment method security, by race, February 2013
                                                                                                    • Interest in Alternative Payment Methods and Features

                                                                                                      • Key points
                                                                                                        • Interest in low-fee prepaid cards is higher than in mobile alternatives
                                                                                                          • Figure 87: Interest in payment method alternatives, by gender, February 2013
                                                                                                          • Figure 88: Interest in payment method alternatives, by age, February 2013
                                                                                                          • Figure 89: Interest in payment method alternatives, by race, February 2013
                                                                                                      • Interest in Alternative Uses for Mobile Phones

                                                                                                        • Key points
                                                                                                          • Interest in additional uses of mobile phones
                                                                                                            • Figure 90: Interest in alternative uses for mobile phones, by gender, February 2013
                                                                                                            • Figure 91: Interest in alternative uses for mobile phones, by age, February 2013
                                                                                                            • Figure 92: Interest in alternative uses for mobile phones, by race, February 2013
                                                                                                        • Cluster Analysis

                                                                                                            • Credit Dependents
                                                                                                              • Demographics
                                                                                                                • Characteristics
                                                                                                                  • Opportunity
                                                                                                                    • Conventional Shoppers
                                                                                                                      • Demographics
                                                                                                                        • Characteristics
                                                                                                                          • Opportunity
                                                                                                                            • Debit Adopters
                                                                                                                              • Demographics
                                                                                                                                • Characteristics
                                                                                                                                  • Opportunity
                                                                                                                                    • Cluster characteristics
                                                                                                                                      • Figure 93: Target clusters, February 2013
                                                                                                                                      • Figure 94: Financial products owned, by target cluster, February 2013
                                                                                                                                      • Figure 95: Preferred payment method for purchasing small everyday items such as gasoline & food, by target clusters, February 2013
                                                                                                                                      • Figure 96: Preferred payment method for purchasing medium priced ticket items, by target clusters, February 2013
                                                                                                                                      • Figure 97: Preferred payment method for purchasing large ticket items such as a television or furniture, by target clusters, February 2013
                                                                                                                                      • Figure 98: Preferred payment method for online purchases, by target clusters, February 2013
                                                                                                                                      • Figure 99: Preferred payment method for paying bills such as mortgage payments or utilities, by target clusters, February 2013
                                                                                                                                      • Figure 100: Preferred payment method for paying money owed to family, friends, baby sitters, etc, by target clusters, February 2013
                                                                                                                                      • Figure 101: Familiarity with payments brands, by target clusters, February 2013
                                                                                                                                      • Figure 102: Types of cards owned and payment behavior, by target clusters, February 2013
                                                                                                                                      • Figure 103: Attitudes toward using credit or debit cards, by target clusters, February 2013
                                                                                                                                      • Figure 104: Level of concern about security for various payment methods, very or somewhat concerned, by target clusters, February 2013
                                                                                                                                      • Figure 105: interest in payment method alternatives, by target clusters, February 2013
                                                                                                                                      • Figure 106: Interest in alternative uses for mobile phones, by target clusters, February 2013
                                                                                                                                      • Figure 107: Target clusters, by demographic, February 2013
                                                                                                                                  • Appendix – Additional Consumer Tables

                                                                                                                                        • Figure 108: Smartphone ownership, by household income, February 2013
                                                                                                                                        • Figure 109: Smartphone ownership, by gender and age, February 2013
                                                                                                                                        • Figure 110: Smartphone ownership, by race, February 2013
                                                                                                                                    • Appendix – Trade Associations

                                                                                                                                      Companies Covered

                                                                                                                                      • MasterCard Incorporated
                                                                                                                                      • Visa U.S.A. Inc.

                                                                                                                                      Canadian Consumer Payment Preferences - US - April 2013

                                                                                                                                      £3,199.84 (Excl.Tax)