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Consumer Payment Preferences - Canada - November 2014

Published By :

Mintel

Published Date : Nov 2014

Category :

Banking

No. of Pages : 204 Pages

Security and trust issues are the dominant factors in the minds of consumers at present and override the convenience benefits of contactless cards and mobile banking. This is likely to change in the near future as these concerns dissipate with the introduction of superior security features.
Table of Content

Introduction

Definition
Excluded
Abbreviations
Glossary
Contactless cards (Tap and Go)
Mobile payments
Mobile wallet
Near Field Communications (NFC)
Online payments via app
Person-to-Person Payments (also known as e-transfer)
Quick Response Code (QR Code)

Executive Summary

Market factors
Canadian economy to pick up speed, but many risks remain
Outlook on the real estate and housing market
Wealth distribution in Canada
Household debt in Canada
Smartphone and tablet ownership
Products and innovations
Brand communication and promotion
The consumer
Canadians have used PayPal more than cheques in the past three months
Figure 1: Payment methods used in the past three months, August 2014
Online bill payments and credit card purchases are the most common payment actions
Figure 2: Payment-related actions performed in the past three months, August 2014
Non-payment mobile phone features dominate interest preferences
Figure 3: Interest in mobile banking features (% who are interested – top two box), August 2014
Three quarters of Canadians prefer to pay off credit card balance monthly
Figure 4: Attitudes towards payments, August 2014
What we think

Issues and Insights

Overcoming lack of trust is key to increasing mobile banking adoption
The facts
The implications
Highlighting the non-payment-related mobile banking functionalities will generate more consumer interest
The facts
The implications
Monitoring non-traditional players such as PayPal, Apple Pay that pose a competitive threat to Canada’s banks
The facts
The implications
Calming the security concerns of Chinese Canadians
The facts
The implications

Trend Application

Trend: Guiding Choice
Trend: Life Hacking
Trend: Make it Mine

Market Drivers

Key points
Demographic overview
Population count and growth in Canada
Figure 5: Share of population of Canada, by territory/province, 2014
Figure 6: Share of population in different age groups, by territory/province, 2013
Canada’s population is expected to age in the coming years
Figure 7: Population aged 65 years and over in Canada, historical and projected (% of total), 1971-2061
Economic overview
IMF says Canadian economy to pick up speed, but many risks remain
Figure 8: Canada’s GDP, by quarter, 2008-14
Figure 9: Household disposable incomes and savings in Canada, by quarter, 2008-14
Unemployment rates remain steady
Figure 10: Canada’s unemployment rate, by gender, 2008-14
Consumer confidence
Interest rates, inflation and market volatility
Figure 11: Inflation rates in Canada, 2004-14
Outlook on the real estate and housing market
Wealth distribution in Canada
Figure 12: Canada median net worth, by province, 2012
Household debt in Canada
Smartphone and tablet ownership
Figure 13: Tablet, smartphone and mobile ownership, by age, August 2014

Products and Innovations

Key points
Tangerine Bank’s biometric tools for mobile banking 
Barclays’ bPay contactless wristband
Venmo payments
Ribbon
MasterCard and One Inc.’s loyalty program solution
MasterCard’s credit card with an embedded fingerprint reader
Apple Pay
Intuit’s GoPayment
Square Reader (Square Register App)
PAYD Pro
Flint Payment App
Zoompass
RBC and Nymi

Brand Communication and Promotion

Key points
RBC’s Mobile Banking Campaign
TD says thanks in a special way
Scotiabank’s mobile banking (Bank Anywhere) campaign
CIBC’s cheque deposit (remote deposit capture) feature advertisement
CIBC/Tim Hortons’ Timmy Card

The Consumer – Payment Methods Used

Key points
Canadians have used PayPal more than cheques in the past three months
Figure 14: Payment methods used in the past three months, August 2014
Over a quarter of Canadians have used six or more methods of payment
Figure 15: Repertoire analysis of payment methods, August 2014

The Consumer – Reasons for Not Using Contactless Cards

Key points
Inertia is the main reason for non-usage of contactless cards
Figure 16: Reasons for not using contactless cards, August 2014
CHAID analysis
Methodology
Males with household incomes above $75,000 over-index on contactless card usage by 10%
Figure 17: Usage of contactless credit/debit cards – CHAID – tree output, August 2014

The Consumer – Payment Actions

Key points
Online bill payments and credit card purchases are the most common payment actions
Figure 18: Payment-related actions performed in the past three months, August 2014
About a fifth of Canadians have used deal site discounts and/or redeemed credit card reward points
Figure 19: Payment actions related to rewards and offers, August 2014

The Consumer – Interest in Mobile Payment Offerings

Key points
Non-payment mobile phone offerings dominate interest preferences
Figure 20: Interest in mobile banking features (% who are interested – top two box), August 2014
About half of smartphone owners are interested in features related to rewards and personalized offers
Figure 21: Mobile banking features related to rewards and loyalty (% who are interested – top two box), August 2014

The Consumer – Theft and Fraud Activity

Key points
One in 10 Canadians have been a victim of credit card fraud in the past two years
Figure 22: Theft and fraud activity over the past two years, August 2014

The Consumer – Price Display Preference

Key points
Most Canadians are in favour of tax-inclusive pricing
Figure 23: Price display preference, August 2014

The Consumer – Attitudes towards Payments

Key points
Summary of attitudes towards payment preferences
Figure 24: Attitudes towards payments, August 2014
Older Canadians more concerned about security
Figure 25: Attitudes related to security and trust, August 2014
Consumers not overly impressed by the convenience of mobile payments
Figure 26: Attitudes related to convenience, August 2014
Almost two thirds of Canadians prefer to pay by credit card for large-ticket items
Figure 27: Attitudes related to credit card usage, August 2014

The Consumer – Payment Preferences and Chinese Canadians

Key points
Chinese Canadians are more prolific users of the latest payment technologies
Figure 28: Payment methods in the past three months: Chinese Canadians versus Whites/Caucasians, August 2014
Deal site discounts and rewards resonate with Chinese Canadians
Figure 29: Payment actions in the past three months: Chinese Canadians versus Whites/Caucasians, August 2014
Chinese Canadians more likely to appreciate the convenience of mobile payments but are also more concerned about security
Figure 30: Select attitudes towards payments: Chinese Canadians versus Whites/Caucasians, August 2014

The Consumer – Target Groups

Key points
Four target groups
Figure 31: Target groups, August 2014
Technophobes (23%)
Techno-enthusiasts (26%)
Credit Card Lovers (28%)
Savvy shoppers (23%)

Appendix – The Consumer – Payment Methods Used

Figure 32: Payment methods used within the past 3 months, August 2014
Figure 33: Most popular payment methods used within the past 3 months, by demographics, August 2014
Figure 34: Next most popular payment methods used within the past 3 months, by demographics, August 2014
Figure 35: Other payment methods used within the past 3 months, by demographics, August 2014
Repertoire analysis
Figure 36: Repertoire of payment methods used within the past 3 months, August 2014
Figure 37: Repertoire of payment methods used within the past 3 months, by demographics, August 2014

Appendix – The Consumer – Usage of Contactless Cards

Figure 38: Reasons for not using contactless cards, August 2014
Figure 39: Reasons for not using contactless cards, by demographics, August 2014

Appendix – The Consumer – Payment Actions

Figure 40: Payment actions performed in the past 3 months, August 2014
Figure 41: Most popular payment actions performed in the past 3 months, by demographics, August 2014
Figure 42: Next most popular payment actions performed in the past 3 months, by demographics, August 2014

Appendix – The Consumer – Interest in Mobile Phone Payment Offerings

Figure 43: Interest in mobile phone payment offerings, August 2014
Figure 44: Interest in mobile phone payment offerings – Ability to check your card/bank balance on your mobile phone before you buy something, by demographics, August 2014
Figure 45: Interest in mobile phone payment offerings – Instantly view debit/credit card transactions on your mobile phone, by demographics, August 2014
Figure 46: Interest in mobile phone payment offerings – The ability to pay for purchases using your reward/loyalty points accessed through your mobile phone, by demographics, August 2014
Figure 47: Interest in mobile phone payment offerings – The ability to hold all your store loyalty/rewards cards on your phone so you can present the right one at checkout, by demographics, August 2014
Figure 48: Interest in mobile phone payment offerings – The ability to instantly transfer money to another person using a mobile device, by demographics, August 2014
Figure 49: Interest in mobile phone payment offerings – Pay for purchases using your debit/credit card via mobile phone, by demographics, August 2014
Figure 50: Interest in mobile phone payment offerings – The ability to set up a prepaid account where the account reloads automatically from a debit/credit card when the balance gets low, by demographics, August 2014
Figure 51: Interest in mobile phone payment offerings – A function that lets me know if there is an offer that might interest me based on where I am located, by demographics, August 2014
Figure 52: Interest in mobile phone payment offerings – An instant notification if a purchase would take you over your overdraft limit, by demographics, August 2014
Figure 53: Interest in mobile phone payment offerings – Ability to store electronic receipts/warranty documents for purchases that you have made, by demographics, August 2014
Figure 54: Interest in mobile phone payment offerings – Personalised offers based on your shopping habits, by demographics, August 2014
Figure 55: Interest in mobile phone payment offerings – Use your mobile phone banking app to withdraw cash from an ATM, by demographics, August 2014

Appendix – The Consumer – Theft and Fraud Activity

Figure 56: Theft or fraud activity, August 2014
Figure 57: Most popular theft or fraud activity, by demographics, August 2014
Figure 58: Next most popular theft or fraud activity, by demographics, August 2014

Appendix – The Consumer – Price Display Preference

Figure 59: Price display preference, August 2014
Figure 60: Price display preference, by demographics, August 2014

Appendix – The Consumer – Attitudes towards Payments

Figure 61: Attitudes towards payments, August 2014
Figure 62: Agreement with the statements ‘I prefer to pay off the balance(s) on my credit card(s) every month’ and ‘I like to look for new offers and check that I am getting the best deal from my financial institution’, by demographics, August 2014
Figure 63: Agreement with the statements ‘I try to avoid using credit cards whenever possible’ and ‘I prefer to use multiple credit cards for my financial transactions’, by demographics, August 2014
Figure 64: Agreement with the statements ‘I am concerned about mobile payments (eg smartphone or tablet) not being as secure as other types of payments’ and ‘I am concerned that contactless credit cards are not as secure as other credit cards’, by demographics, August 2014
Figure 65: Agreement with the statements ‘The convenience of making payments with my mobile phone appeals to me’ and ‘I prefer to pay by credit card rather than cash or debit for large-ticket items (eg TV or furniture)’, by demographics, August 2014
Figure 66: Agreement with the statements ‘I am uncomfortable with the amount of data that is collected about my spending habits’ and ‘I prefer to shop at stores that display prices inclusive of tax’, by demographics, August 2014
Figure 67: Agreement with the statements ‘I wouldn't trust anyone other than established financial institutions when it comes to making card payments’ and ‘I spend less money shopping if I decide beforehand not to use my credit card’, by demographics, August 2014

Appendix – The Consumer – Payment Preferences and Chinese Canadians

Figure 68: Selected demographics, by total population against Chinese Canadians, September 2014

Appendix – The Consumer – Target Groups

Figure 69: Target groups, August 2014
Figure 70: Target groups, by demographics, August 2014
Figure 71: Payment methods used within the past 3 months, by target groups, August 2014
Figure 72: Reasons for not using contactless cards, by target groups, August 2014
Figure 73: Payment actions performed in the past 3 months, by target groups, August 2014
Figure 74: Attitudes towards payments, by target groups, August 2014
Figure 75: Price display preference, by target groups, August 2014

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