Description

Providing the most comprehensive and up-to-date information and analysis of the Canada Credit Cards market, including the behaviors, preferences and habits of the consumer.

The COVID-19 pandemic saw a dramatic change in the ways that consumers use and interact with credit cards, increasing the reliance on contactless and mobile payment options. Because of lockdowns and travel restrictions throughout 2020, customer spending fell as did consumer confidence in their financial stability.

Credit cards are the most popular payment, with the majority of Canadians owning at least one credit card. The marker is dominated by the major banks, although smaller card companies, store cards and international companies are beginning to offer multiple alternative options to consumers.

The economic uncertainties of 2020 saw credit card balances dropped by 12.3% in Q2. These financial issues could indicated further expansion is needed into rewards and lower interest rate offers to attract consumers. “Buy Now Pay Later” financing options and prepaid debit cards continue to be emerging challengers in the industry. 68% of credit card users would like to see more innovative rewards, while 46% say they would use a brand-affiliated card regardless of rewards.

Read on to discover more details or take a look at all of our Canada Financial Services market research.

Quickly understand

  • The impact of COVID-19 on consumer behaviour related to credit cards.
  • This Report covers consumer attitudes and behaviour related to credit cards. It explores ownership, rewards usage, COVID-19-specific credit card behaviours and attitudes, value perception of rewards, the competitive ecosystem, factors influencing card usage, attitudes towards rewards and general attitudes towards credit cards.

Covered in this report

Brands: Neo Financial, Brim Financial, MasterCard, Air Canada, Ampli, Mogo, Klarna Bank AB, PayBright, Sephora, Clearpay, Splitit, American Express, Vancity, Apple Card.

Expert analysis from a specialist in the field

Written by Sanjay Sharma, a leading analyst in the Financial Services sector, his extensive knowledge delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.

Credit card spending is down due to the pandemic. Rewards are great tools to spur incremental spend but consumers are rethinking which rewards matter to them. Innovative rewards are in and cashback remains king, but travel rewards are less relevant now.

Sanjay Sharma
Senior Financial Services Analyst

Table of Contents

  1. Overview

    • What you need to know
    • Key issues covered in this Report
  2. Executive Summary

    • Top takeaways
    • Market overview
    • Impact of COVID-19 on credit cards
      • Figure 1: Short, medium and longer-term impact of COVID-19 on credit cards, August 2020
    • Opportunities and Challenges
    • Strong demand for innovative rewards
    • COVID-19 could reduce the influence of branch staff while increasing the influence of online reviews
    • Brand affiliation matters
    • COVID-19 forcing a rethink of rewards
    • COVID-19 spurs BNPL
    • Repackaging travel rewards in the COVID-19 era
    • Younger users more likely to prefer a card issued by their main financial institution
  3. The Market – Key Takeaways

    • Impact of COVID-19 on credit cards
    • Interchange fees decline
    • Credit card challengers and alternatives
    • Credit scoring gets an upgrade
    • COVID-19 credit card relief measures
  4. Market Factors

    • Impact of COVID-19 on credit cards
      • Figure 2: Short, medium and longer-term impact of COVID-19 on credit cards, August 2020
    • Interchange fees
    • Security of mobile wallets
    • Credit scoring gets an upgrade
  5. Market Opportunities

    • COVID-19 credit card relief measures
    • New credit cards
      • Figure 3: Neo Financial Instagram post, July 2020
    • Brim Financial
      • Figure 4: Brim Financial Instagram post, April 2020
    • Other challengers to traditional credit cards
    • Shopping apps offer another way to earn rewards
  6. Companies and Brands – Key Takeaways

    • Air Canada unveils new loyalty program
    • Mogo launches prepaid Visa with automatic carbon offsets
    • BNPL takes off
  7. Competitive Strategies

    • Air Canada unveils new loyalty program
    • Mogo launches prepaid Visa with automatic carbon offsets
    • Buy Now, Pay Later
    • Afterpay comes to Canada
    • Visa Installments pilots in the US
    • Splitit partners with MasterCard to expand BNPL
    • Citi introduces Buy Now, Pay Later for Amazon purchases in the US
    • Sezzle enters the Canadian market
    • COVID-19 spurs BNPL
  8. Marketing Campaigns

    • American Express Canada “Stands tall for small”
      • Figure 5: Amex Shop Small – Supporting Local Businesses, July 2020
    • Vancity does its bit to support small businesses in BC
      • Figure 6: When we’re open to change, magic happens, June 2020
    • RBC motivates customer spending…
    • …while CIBC launches revival rewards
    • Visa keeps its Olympic sponsorship relevant
      • Figure 7: “Front levers aren’t easy. But washing your hands is” Instagram video, April 2020
    • Apple Card (US) increases acquisition activity
  9. The Consumer – What You Need to Know

    • More than four in five Canadians own a credit card
    • Credit card choice and usage influenced by rewards
    • Consumers value cashback and innovative rewards
    • Few are satisfied with COVID-19 relief measures
    • Younger consumers more influenced by online reviews
    • Most consumers prefer using a physical card
  10. Ownership and Usage

    • More than four in five Canadians own a credit card
      • Figure 8: Ownership of financial products, June 2020
    • Credit card ownership by age is three-tiered
      • Figure 9: Credit card ownership, by age, June 2020
    • Income and ethnic differences in ownership
      • Figure 10: Credit card ownership, by income, June 2020
  11. Attitudes towards Rewards

    • Credit card choice and usage influenced by rewards
      • Figure 11: Attitudes towards rewards, June 2020
    • Around a third of 18-44s find it difficult to understand the rewards system
    • Repackaging travel rewards in the COVID-19 era
    • Younger consumers more influenced by interest rate and brand affiliation
      • Figure 12: Select attitudes towards rewards (% agree), 18-44s vs over-45s, June 2020
    • COVID-19 forcing a rethink of rewards
  12. Reasons Driving Usage

    • Cashback is the top driver of usage
      • Figure 13: Reasons for using primary card, June 2020
    • Men and younger users keener on some factors
      • Figure 14: Reasons for using primary card (select), by gender, June 2020
      • Figure 15: Reasons for using primary card (select), 18-44s vs over-45s, June 2020
    • Consumers value cashback and innovative rewards
      • Figure 16: Attitudes related to value perception of rewards, June 2020
    • Strong demand for innovative rewards
      • Figure 17: Select attitudes related to value perception of rewards (% agree), 18-44s vs over-45s, June 2020
    • Young men more willing to pay a fee for better rewards
      • Figure 18: Select attitudes related to value perception of rewards (% agree), by gender, June 2020
    • Majority believe rewards are over-estimated
  13. COVID-19 and Credit Cards

    • Few are satisfied with relief measures
      • Figure 19: COVID-19 and credit cards, June 2020
    • Younger users have been more impacted
      • Figure 20: COVID-19 and credit cards (select), by age, June 2020
    • COVID-19 could reduce the influence of branch staff while increasing the influence of online reviews
  14. Competitive Ecosystem

    • Visa/MasterCard preferred due to their wide acceptance
      • Figure 21: Attitudes related to the credit card competitive ecosystem, June 2020
    • Younger consumers more influenced by online reviews
    • Younger consumers more likely to prefer a card issued by their main financial institution
      • Figure 22: Attitudes related to the credit card competitive ecosystem (select), 18-44s vs over-45s, June 2020
    • Asian Canadians strongly influenced by online reviews
  15. General Attitudes towards Credit Cards

    • Unpaid balances are a significant source of stress
      • Figure 23: General attitudes towards credit cards, June 2020
    • Most consumers prefer using a physical card
      • Figure 24: General attitudes (select) towards credit cards (% agree), 18-44s vs over-45s, June 2020
    • 18-24s favour debit
    • Older consumers and women are more apprehensive about storing card info on their devices
      • Figure 25: General attitudes (select) towards credit cards (% agree), by gender, June 2020
      • Figure 26: Replace Your Lost or Stolen Credit Card, October 2019
    • Around a quarter of 18-44s have been rejected for a credit limit increase
  16. Appendix – Data Sources and Abbreviations

    • Data sources
    • Consumer survey data
    • Consumer qualitative research
    • Abbreviations and terms

About the report

This market report provides in-depth analysis and insight supported by a range of data. At the same time, introductory and top-level content is provided to give you an overview of the issues covered.

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Data

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