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Mobile and Alternative Payments in Canada, 2nd Edition

  • August 2014
  • -
  • Packaged Facts
  • -
  • 144 pages

Mobile banking and E-Wallet/P2P payments have taken hold in Canada, and while near-term challenges to widespread adoption remain, mobile payments made at the physical point of sale could reach $13 billion by 2017.

A burst of mobile and digital wallets are just hitting the marketplace, which should significantly boost interest in and usage of mobile POS payments. But the usage footprint of NFC contactless payments remains limited, and NFC alone can not drive mainstream adoption. NFC-enabled phone sleeves and bar code-based payments should help to close the gap. Moving mobile payments into the mainstream also requires harnessing the mobile/digital wallet: if mobile payments are only about tapping a phone to make a payment instead of swiping a card, there’s not much room for growth. From this perspective, Canadian wallet providers are making the right moves.

Packaged Facts’ Mobile & Alternative Payments in Canada, 2nd Edition provides the insights to stay abreast of this dynamic market. Report coverage includes market size and forecast for mobile POS payment value and for E-Wallet/P2P transaction value. In addition, the report explores a range of positive and negative factors influencing growth, as well as how wallet providers are positioning their solutions to consumers.
The report assesses Canadian consumer patterns in relation to:

Use and usage frequency of mobile banking and usage of specific mobile banking features, by demographic group
Use and usage frequency of mobile payments by demographic group
Use of a range of P2P methods, including PayPal, Interac e-Transfer, bank wire transfers, bank P2P transfers, money transfer services, and other emerging methods
Choice of payment at the point of sale and via the internet. As part of our point-of sale purchase analysis, we assess the degree consumers initiate payments via mobile wallets (i.e. PayPass, PayPal and Interac)
Use of various added-value mobile phone financial, promotional & shopping tools
Mobile & Alternative Payments in Canada also provides in-depth analysis of industry participants and their mobile payment strategies, including those employed by the card networks Interac, MasterCard, and Visa; major Canadian banks such as Bank of Montreal, Canadian Imperial Bank of Commerce, Royal Bank of Canada, Scotiabank, and Toronto-Dominion Bank; mobile network operators, with a focus on Rogers Communications, EnStream, Blackberry, and Bango; alternative payments & emerging wallet payment providers (including PayPal, Square, Payfirma and MintChip); and QSR retailers Starbucks and Tim Hortons (with discussion of key issues to merchant adoption of mobile payments).

The report also provides a competitive overview of the Canadian payment infrastructure, payment methods, and payments laws and regulations, as well as summary analysis of payments industry competition and ongoing government-driven policy initiatives.

Table Of Contents

Mobile and Alternative Payments in Canada, 2nd Edition
Chapter 1: Executive Summary
Report Scope
Scope limitations
Report Summary
Market size and forecast
Mobile banking and payments have taken hold
A confluence of trends favor continued growth
While near-term limitations remain significant
Longer-term growth is assured
Reimaging and promoting the mobile/digital wallet
Canadian mobile banking trends
Canadian mobile payments trends
Point-of-sale and internet purchase methods
Electronic options, cash and check at the point of sale
Mobile payments at the point of sale
Mobile payments made via the internet
Canadian P2P usage trends
Canadian use of mobile financial, promotional and shopping tools
Mobile financial and promotional organization tools
Mobile shopping tools
Canadian mobile payments strategies: card associations
Interac
MasterCard
Visa
Canadian mobile payments strategies: banks
Bank of Montreal
Canadian Imperial Bank of Commerce
Royal Bank of Canada
Scotiabank
Toronto-Dominion Bank
Canadian mobile payments: mobile network operator strategies
EnStream
Rogers Communications
Blackberry
Bango
Canadian mobile payments: alternative provider strategies
PayPal
Square
Payfirma
MintChip
Canadian mobile payments: retailer innovation
Notes from the merchant front
Starbucks
Tim Hortons
Chapter 2: Canadian Payments Organization and Regulation Overview
Introduction
Canadian payments infrastructure
Payment methods
Table 2-1: Canadian Payment Methods
Canadian payment laws
Payments industry undergoing significant change
The Task Force for the Payments System Review
Code of Conduct for the Credit and Debit Card Industry
Application to mobile payments
Merchant payment choice
Competing domestic debit applications
Principle of equal branding
Debit and credit comingling
CBA Mobile Payments Reference Model
Competition Bureau
Huge discrepancy between credit and debit fees
Challenging practices as anti-competitive
Competition Tribunal dismisses case against Visa and MasterCard
Commissioner of Competition remains watchful
Government picks up where Competition Tribunal leaves off
Adding prepaid cards to the regulatory mix
Chapter 3: Market Size and Forecast
Summary analysis
A confluence of trends favor continued growth
But near-term limitations remain significant
But longer-term growth is assured
Reimaging and promoting the mobile/digital wallet
But continue to represent a tiny sliver of retail payments
Graph 3-1: Canadian Retail Payments Value: 2008, 2011 and 2012
Table 3-1: Canadian E-Wallet/P2P Payments Value: 2011-2016
Mobile payments value estimate
Table 3-2: Canadian Adult Consumer Mobile Payments Transaction Volume, 2014
Table 3-3: Canadian Adult Consumer Mobile POS Payments Transaction Value, 2014
Table 3-4: Canadian Mobile POS payment value: 2014-2017
Migration of cash and check to electronic payments
Lots of checks and cash left to convert
But electronic and mobile developments to help put checks on the ropes
Taking flight
Online/mobile opportunity: P2P transactions skew to cash
Table 3-5: Percentage of Consumer Transactions by Method of Payment and Payment Channel
Card-and phone-based opportunity: Most micropayments made in cash
Table 3-6: Percentage of Consumer Transactions by Transaction Value Range and Method of Payment
Harnessing mobile phones
Smartphone penetration
Table 3-7: Canadian Mobile Phone and Smartphone Users: Percentage of Population, 2014
Online banking highly penetrated
Tapping into e-commerce
Online orders to top $27 billion in 2014?
Table 3-8: Canadian Electronic Commerce: Number and Value of Orders: 2010 vs. 2012
Card-not-present credit card transactions a growing slice of the pie
Table 3-9: Canadian Internet Orders: Method of Payment, 2012 vs. 2012
Mobile is the word
Mobile payments move beyond niche status
Mobile P2P has taken hold
But not a slam dunk
A growing—but limited—NFC contactless base
30% contactless share of terminals
Small slice of merchants
Large chain skew
Limited range of card types
Credit cards only, please
Table 3-10: Canadian Mobile and Digital Wallets: Card Payment Options, by Type of Card, 2014
Visa has a strong grip
Table 3-11: Canadian Bank Mobile Wallets: Visa, MasterCard and American Express Cards Issued, 2014
But coverage depends on carrier and phone
Table 3-12: Canadian Bank Mobile Wallets: Carrier Acceptance, 2014
Seguing into QR codes
Reimaging the mobile wallet
How can you improve on swiping a card?
Carrot and stick: wrap behavior-changing features around payments
Table 3-13: Canadian Mobile and Digital Wallets, by Provider and Name, 2014
Big steps: PayPal
Big steps: MasterCard
Banks doing it, too
Selling mobile to the public
Emphasis on ease and convenience
Cash replacement
Emphasis on security
Touting rewards
Incentives for trial
Chapter 4: Canadian Mobile Banking Trends
Summary analysis
Mobile banker definition
Mobile bankers
Table 4-1: Mobile Banking: Canadian Usage Penetration
Smartphones bring mobile banking to the mainstream
Table 4-2: Mobile Banking Usage, by Type of Phone Used, 2012 vs. 2014
Mobile banking features and methods
Demographic analysis
Generational trends bode well for uptake over time
HH income not a deal breaker
Table 4-3: Mobile Banking Feature and Method Usage Penetration, by Age and HH Income, 2014
Rural opportunity
Table 4-4: Mobile Banking Feature and Method Usage Penetration, by Province and Population Density, 2014 62
Chapter 5: Canadian Mobile Payments Trends
Summary analysis
Mobile payment definition
Mobile payers
Table 5-1: Mobile Payments: Usage Penetration, Usage in Past Month and Monthly Usage Frequency, 2014.
Mobile payment methods
Table 5-2: Mobile Payment Methods, by Demographic, 2014
Chapter 6: Point-of-Sale and Internet Purchase Methods
Summary analysis
Electronic options, cash and check at the point of sale
Mobile payments at the point of sale
Mobile payments made via the internet
Purchase methods at the point of sale
Table 6-1: Purchase Methods at the Point of Sale: Canadian vs. U.S. Consumers, 2014
Demographic analysis
Table 6-2: Purchase Methods at the Point of Sale, by Demographic, 2014
Mobile phone purchase methods at the point of sale
Definitional context
And the survey says . . . PayPal!
Table 6-3: Use of Mobile Purchase Methods at the Point of Sale, 2014
Demographic analysis
Table 6-4: Use of Four Leading Mobile Purchase Methods at the Point of Sale, by Demographic, 2014
Purchase methods via the internet
Definitional context
And the survey says . . . yes, PayPal!
Table 6-5: Purchase Methods on the Internet: Canadian vs. U.S. Consumers, 2014
Demographic analysis
Table 6-6: Internet Purchase Methods, by Gender, HH Income and Population Group, 2014
Table 6-7: Internet Purchase Methods, by Age, Population Density and Province, 2014
Chapter 7: Canadian P2P Usage Trends
P2P methods
Table 7-1: P2P Methods Used: Canadian vs. U.S. Consumers, 2014
Demographic analysis
Table 7-2: P2P Methods Used, by Demographic, 2014
Chapter 8: Canadian Use of Mobile Financial, Promotional and Shopping Tools .
Introduction
Mobile financial and promotional organization tools
Demographic analysis
Table 8-1: Use of Mobile Financial and Promotional Organization Tools, by Demographic, 2014
Mobile shopping tools
Demographic analysis
Table 8-2: Use of Mobile Shopping Tools, by Demographic, 2014
Chapter 9: Canadian Mobile Payments Strategies: Card Associations
Summary analysis
Interac
MasterCard
Visa
Interac
Non-profit status a boon and a bane
Going corporate
Stranglehold on debit transactions
Completive angle: very low fees
Products and services
Interac Online
Interac e-Transfer
Interac Flash
Debit in the mobile mix (barely)
MasterCard
Contactless leadership
Setting the mobile stage: PayPass
Security
Contactless usage footprint
Mobile relationships
Rogers agreement
MasterPass
And open wallet
Featuring shop and pay innovation
Bridging mobile POS payment options
Easy to use, ease to implement and easy to add features
Global expansion
More payment processors on board
In-app payment
Thank you, C-SAM
Mobile PayPass
Visa
Setting the mobile stage: Visa payWave
payWave skewed heavily to major chains; narrow retail segment scope
Secure, secure, secure
Mobile relationships
CIBC mobile payment app
Mobile deployment in the cloud
Visa Checkout
A narrow goal, for now
Bridging physical and virtual; muzzling Apple
LoopPay: iPhone neutralizer?
Visa Digital Solutions
Chapter 10: Canadian Mobile Payments Strategies: Banks
Summary analysis
Bank of Montreal
Canadian Imperial Bank of Commerce
Royal Bank of Canada
Scotiabank
Toronto-Dominion Bank
Introduction
Bank of Montreal
Mobile PayPass Tag
Canadian Imperial Bank of Commerce
Mobile banking leadership
CIBC Mobile Payment App
Incentive to use it
Who can use it
How they can use it
Limited uptake
Royal Bank of Canada
Mobile wallet launch
Scotiabank
Remote check deposit
Mobile payments app
Toronto-Dominion Bank
Personal banking reach
Expanding credit card business
And mobile banking leadership
TD Mobile Payment
On the way: Ugo
Chapter 11: Canadian Mobile Payments: Mobile Network Operator Strategies
Summary analysis
EnStream
Rogers Communications
Blackberry
Bango
Carrier-Based Payment Strategies
Partnerships, partnerships
But don't each of Big Three need to be on board?
Graph 11-1: Canadian Wireless Subscription Share, by Carrier, Q1 2014
Is 60% good enough?
Graph 11-2: Canadian Smartphone Operating Software Market Share: 2012 vs. 2013
There's NFC capable and then there's NFC enabled
Table 11-1: Leading Smartphone Brands, by Canadian Carrier and NFC Capability, 2014
EnStream provides the glue
If at first you don't succeed, try and try again
Goodbye, Zoompass
Hello, open wallet
Desjardins on board
Rogers Communications
suretap
Not a closed wallet, but not an open one, either
Financial institution? A credit card? A prepaid card?
But banks signing up
Blackberry
BBM Money
Bango
Chapter 12: Canadian Mobile Payments: Alternative Provider Strategies
Summary analysis
PayPal
Square
Payfirma
MintChip
PayPal
152 million accounts and counting
An ecommerce giant
Crossing $200 billion in payment volume
Table 12-1: PayPal Payment Value: Total, Merchant Services and On eBay, 2011-2013
A very low loss rate
A mobile powerhouse
Table 12-2: PayPal Mobile and International Transaction Metrics, 2013
Free processing
In Canada, the mobile payments and P2P leader
Table 12-3: Canadians' Use of PayPal and “Runner Up”: Mobile POS Payment, Internet Payment and P2P, 2014 119
Recipe for success: the PayPal digital wallet
Omni-channel experience
Secure access
Simple, simple, simple
Smoother and quicker payments process
In-app payments
Payment agnostic, but with a plethora of out-of-house and in-house options
Gift cards in the mix
Connecting at the physical point of sale
PayPal Here: POS card payment solution
Online and mobile checkout
But no mobile payment app for physical POS - until now
Mobile check-in
Very limited reach—for now
Other value-added features
On the horizon
PayPal Beacon
Order Ahead and Pay At Table
Note on PayPal metrics
Square, Inc.
Products
Square Reader
Square Register
How much it costs
Table 12-4: Square: Products and Fees in Canada, 2014
Credit cards and gift cards only, please
Payfirma
Cost structure and card coverage
Table 12-5: Payfirma POS Solution Pricing, 2014
MintChip
Chapter 13: Canadian Mobile Payments: Retailer Innovation
Summary analysis
Notes from the merchant front
Starbucks
Tim Hortons
Retailer perspective
Card not present issue
Can we accept mobile Interac?
Businesses won't like a credit card centric model, especially smaller ones
Starbucks Canada takes the barcode route
Stored value card foundation
Tied seamlessly to loyalty program
Helps breed mobile payment success
On deck: mobile order and pay
But Starbucks chooses PayPal in Canada
In-app payment and reload
But card networks not giving up
At Tim Hortons, NFC and barcodes join hands
Doubling down on dual-purpose card
Tim Card sets the stage
for “TimmyMe Pay”
But it's payment only
McDonald's helps RBC make a decision
Appendix
Methodology
Consumer survey methodology
Consumer survey methodology
Packaged Facts Canadian Survey Demographics
Market size methodology
Sources
Report table interpretation
Color coding
Indexing
Dollar figures in this report
Terms and definitions
Mobile wallet versus digital wallet
Prepaid cards versus debit cards
Other terms
Smartphone
Abbreviations

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