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  5. > Retailer Payments, Banking, Insurance and Assistance in Canada

Retailer Payments, Banking, Insurance and Assistance in Canada investigates the market for financial services organised by over 200 major retail brands in Canada. As well as examining their initiatives in payment cards, banking products, insurance and assistance, the study also examines their involvement in proprietary and coalition loyalty programs, and details the online payment mechanisms accepted by those with an online sales capability. Among other data points, the report and PartnerBASE™ dataset that accompanies it embrace the following information about the retailers covered:

- whether they offer their own credit, debit or prepaid cards and, if so, the card issuers that they work with in this context if they do not issue the cards themselves;

- whether they are linked to one or more loyalty programs and, if so, whether these are proprietary or coalition schemes;

- whether they make non-card point-of-sale finance available to their customers and, if so, the finance providers that they employ for this purpose;

- whether they promote mainstream banking products such as general-purpose personal loans, mortgages and savings accounts and, if so, the partners that they co-operate with;

- whether they distribute accident, auto, dental, health, homeowners, life, pet or travel insurance, or any kind of assistance services and, if so, the insurance or assistance providers used;

- for retail brands with an online sales capability, the payment means and providers that they accept for online purchases with consideration of payment cards, online accounts, mobile payments, bank transfers and other online payment options.

The report and PartnerBASE™ dataset can be used in the following ways:

- to gain access to a comprehensive source of information that provides detailed insights into the involvement of major retail brands in Canada in payments, banking, insurance and assistance;

- to monitor the activity of key competitors in retailer financial services including Canada Life, Canadian Tire Bank, Chase, Desjardins and President's Choice Bank;

- to understand the potential in Canada for converting proprietary retailer loyalty cards and coalition loyalty schemes into fully-fledged payment cards;

- to evaluate the extent to which consolidation among conventional banks is opening up opportunities for new retailer banks to emerge as ‘consumer champions';

- to appreciate the range of online payment choices open to consumers in Canada who buy products and services through the websites of major retail groups.

Table Of Contents

Retailer Payments, Banking, Insurance and Assistance in Canada

0.0 EXECUTIVE SUMMARY 1
1.0 INTRODUCTION 3
What is this report about? 3
Rationale 3
In many countries, consumers are tending to gravitate to larger retailers and to buy more online... 3
... which throws up new opportunities in payments, banking, insurance and assistance 3
Methodology 4
Survey of retailers 4
The survey's scope covers 212 important retail brands grouped across ten categories... 4
Definitions 5
Payment, banking, insurance and assistance products and services 5
Operating models 7
Weighted shares 7
PartnerBASE 7
Finaccord 8
2.0 MARKET ANALYSIS 9
Introduction 9
Retailer payment cards 10
Credit, debit and prepaid cards 10
Just over 30% of retailers in Canada promote a co-branded or private-label payment card 10
... with well over a third of these issued by captive providers 10
Although limited to four partners, Chase lays claim to some of the most important relationships 11
Canada Tire's captive partner serves four of the group's retail brands 11
Canada hosts a comparatively fragmented supply structure for retailer payment cards 12
President's Choice Bank serves the various retail brands of the Loblaw (Weston) group 12
Canadian Tire Bank has issued over 4 million MasterCard credit cards 12
TD Bank greatly expanded its payment card portfolio through acquisitions in 2011 and 2013 12
When viewed in weighted terms, Chase jumps to second position and Desjardins remains third 13
MasterCard is used a lot more frequently than Visa for retailer payment cards in Canada 14
Retailer payment card initiatives are most prevalent in the supermarket and hypermarket category 15
Gift cards 17
Over a half of major retail brands in Canada offer a closed-loop prepaid card 17
…with those operating a mixed distribution model the most likely to be active in this field 17
Retailer loyalty programs 19
Over 40% of major retail brands in Canada participate in some type of loyalty scheme… 19
…with supermarket and hypermarket brands the most likely to promote such a program 19
Proprietary loyalty programs 21
Almost a third of major retail brands in Canada operate a proprietary loyalty program 21
Coalition loyalty programs 21
Five coalition schemes are found with active retailer participation in Canada 21
Aeroplan is the original loyalty scheme of international loyalty firm Aimia… 21
…while Air Miles represents another program with roots in aviation 21
Overwaitea's More Rewards program includes partners from outside the group… 22
…as does Hudson's Bay Company's HBC Rewards, which was launched in 2001… 22
…while the Canadian Automobile Association maintains its own coalition program 22
Consumer finance 23
Provision rates for point-of-sale finance are markedly lower those for retailer payment cards... 23
… with only six providers found to be active in this sphere 23
Ranked second in the weighted analysis, Bill Me Later holds key several partnerships with online retailers 24
Speciality retailers feature the highest provision rate for consumer finance 25
Banking products 27
Overview 27
The distribution of mainstream banking products is limited to two major retailer groups… 27
Personal loans, mortgages and savings accounts 27
... albeit these encompass as many as 14 separate brands 27
CIBC benefits from its long-standing relationship with President's Choice Financial 28
International payments / remittances 31
As with mainstream banking products, retailers in the Weston group are active in international payments... 31
…using the Interac e-Transfer service, a relative of Canada's major debit card network 31
Western Union is the other provider used in this field by major retail brands in Canada 31
Insurance and assistance 34
20 major retail chains in Canada promote mainstream forms of insurance of the type researched... 34
... with numerous insurance underwriters and brokers used as providers... 34
... among which Canada Life, Manulife and Western Financial Insurance are prominent in weighted terms 36
Supermarket and hypermarket brands display the greatest enthusiasm for selling insurance 37
Online payments 38
Acceptance rates 38
Payment cards are the preferred online payment option in Canada by a significant margin 38
Payment cards 38
Online acceptance rates for American Express approach those found for MasterCard and Visa 38
Online accounts 40
PayPal dominates but faces future competition from two rivals launched in 2013 40
Penetration of online accounts is most advanced among online retailers of sporting goods 41
Mobile payments 42
Bank transfers 42
Direct bank transfers are not an especially common means of online payment for retailers in Canada 42
Other methods of online payment 43
Two online retail brands accept other forms of payment online 43
3.0 APPENDIX 45
Major captives and joint ventures 45


List of Graphics / Tables


0.0 EXECUTIVE SUMMARY 1
Provision rates for key payment, banking, insurance and assistance products, adherence rates for loyalty
schemes and online payment product acceptance rates among retailers in Canada, 2014 2
1.0 INTRODUCTION 3
Retailers researched in Canada, segmented by category, 2014 4
Retailers researched in Canada segmented by distribution model, 2014 5
2.0 MARKET ANALYSIS 9
Provision of retailer payment cards by type of card in Canada, 2014 10
Retailer payment cards in Canada: provision rate and operating models, 2014 11
Retailer payment cards in Canada: unweighted and weighted issuer share of partnerships, 2014 .. 13
Retailer payment cards in Canada: unweighted and weighted network share of partnerships, 2014 14
Provision of retailer payment cards by retailer category and distribution model in Canada, 2014 16
Provision of retailer gift cards by retailer category and distribution model in Canada, 2014 18
Retailer loyalty programs in Canada: provision rates, program types and links to payment and other cards,
2014 19
Provision of or involvement in loyalty programs by retailer category and distribution model in Canada,
2014 20
Coalition loyalty programs in Canada: unweighted share of retailer brand members, 2014 22
Retailer consumer finance in Canada: provision rate and operating models, 2014 23
Retailer consumer finance in Canada: unweighted and weighted provider share of partnerships, 2014 ... 25
Provision of retailer consumer finance by retailer category and distribution model in Canada, 2014 26
Retailer provision of other banking products and services in Canada, 2014 27
Retailer personal loans, mortgages and savings accounts in Canada: provision and operating models,
2014 28
Retailer personal loans, mortgages and savings accounts in Canada: unweighted and weighted provider
share of partnerships, 2014 29
Provision of personal loans, mortgages and savings accounts by retailer category and distribution model
in Canada, 2014 30
Retailer international payments / remittances in Canada: provision and operating models, 2014 31
Retailer international payments / remittances in Canada: unweighted and weighted provider share of
partnerships, 2014 32
Provision of international payments / remittances by retailer category and distribution model in Canada,
2014 33
Retailer insurance and assistance in Canada: provision by policy type, 2014 34
Retailer insurance and assistance in Canada: provision and operating models, 2014 35
Retailer insurance and assistance in Canada: unweighted and weighted provider share of partnerships,
2014 36
Provision of insurance and assistance by retailer category and distribution model in Canada, 2014 37
Retailer online payment acceptance in Canada: acceptance rates by payment type, 2014 38
Payment cards accepted as an online payment mechanism by retailers in Canada: unweighted and
weighted network share of acceptance, 2014 39
Acceptance of payment cards as an online payment mechanism by retailer category in Canada, 2014 .. 40
Online accounts accepted as an online payment mechanism by retailers in Canada: unweighted and
weighted provider share of acceptance, 2014 41
Acceptance of online accounts as an online payment mechanism by retailer category in Canada, 2014 . 42
Acceptance of direct bank transfers as an online payment mechanism by retailer category in Canada,
2014 43
Acceptance of other types of online payment mechanisms by retailer category in Canada, 2014 44
3.0 APPENDIX 45
Retailer captives and joint ventures in payments, banking, insurance and assistance in Canada: operating
models, partners and ownership, 2014 45

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