2019 J.P. Morgan Global Payment Trends

2019 Global Payments Trends Report - Canada Country Insights

CANADA INSIGHTS REPORT


Canada’s homegrown e-commerce market has been slow to develop, creating a strong cross-border shopping culture. With double-digit growth predicted, however, it is quickly catching up to other international marketplaces. Merchants who can meet the high expectations of this affluent nation, particularly around free and fast shipping, could attract customers. To help our clients locate, attract and keep their customers, we have tracked and assessed e-commerce developments in 34 mature and emerging markets around the globe.

Introduction

 

In 2019, Canada’s real gross domestic product is expected to increase two percent matching the figures for 2018. But growing uncertainty around the United States and the overall global outlook have increased the downside risks to the forecast.1 When it comes to domestic demand, housing activity is expected to stabilize somewhat in 2019, which should lift consumer sentiment and help to support household consumption. Labor market activity remains constructive, although wage gains have slowed notably compared with earlier trends.2 Business sentiment in Canada has turned more subdued in recent months, but is not weak.3 Despite these mixed indicators, e-commerce growth is expected to be strong in 2019 and beyond,4 as Canadian merchants begin to really capitalize on the huge promise that this sector holds. 5

This document is based on projected figures and is subject to change at any time.

 

Strong growth expected in a wealthy, internet-savvy market

 

The Canadian business to consumer e-commerce market is said to resemble the neighboring U.S. market in terms of features and preferences.16 For example, card payments dominate in both markets17 and they have similar penetrations for mobile commerce.18,19 But Canada’s market is much smaller, at $46 billion (CAD61 billion),20 due mainly to a significantly lower population (36.7 million,21 compared with 325.7 million citizens in the U.S.).22 In addition, online shopping has been relatively slow to develop in Canada, partly because of a reluctance from domestic retailers to adapt and start selling online.23 But growth is now strong as Canadian retailers are catching up and investing in digital platforms to reach customers over the vast geography of the country, and responding to increasing competition from global e-commerce companies.24 In the period up to 2021, the Canadian e-commerce market will expand at a faster rate than its southern neighbor, posting a compound annual growth rate of 10.8 percent, compared with 10.2 percent in the U.S. 25 Two major online shopping periods in Canada are Black Friday/Cyber Monday and Boxing Day. On both, e-commerce outstrips in-store sales.

 

High internet penetration underpins confident sales expectations

 

There are various factors supporting a double-digit growth prediction. Internet penetration in Canada, at 92 percent,26 is even higher than in the U.S. (89 percent), which stands as the second most valuable e-commerce market in the world (after China).27 Canada is the world’s eighth wealthiest country,28 and its citizens spend on average $2,026 (CAD2,703) a year online,29 the second highest amount out of the non-European countries included in this report series.* However, while penetration is good, internet use is highest in urban areas, with more remote northerly regions still subject to slower and more costly internet connections.30 International merchants should be aware that more than 200 languages are spoken in Canada, with English and French the two official languages.31 Sites that offer multiple languages could find success within this highly multilingual nation.

Cross-border shopping accounts for 16.7 percent of purchases made online in Canada,32 accounting for $7.7 billion (CAD10.3 billion) in total annual sales.33 Some 67 percent of Canadian online shoppers have already made a purchase from abroad.34 The success of international e-commerce merchants may be due to the historical disinclination of domestic merchants to offer online shopping. The U.S. is the primary overseas shopping destination, followed by China and the UK.35

 

Fast and free services dominate shoppers’ delivery expectations

 

Amazon is the country’s most popular website, with 21 percent of all Canadian online shoppers holding an Amazon Prime account.36 The high uptake of Amazon Prime and its fast delivery options suggests a demand for the rapid arrival of purchases,37 particularly among younger demographics. Those aged 54 and under value ‘same-day delivery’ more highly than the over-55 demographic.38 One barrier to uniformly fast delivery is Canada’s geography. The country encompasses a wide range of logistical challenges, from major mountain ranges like the Rockies to the country’s vast interior plains and its arctic region.39

The availability of free shipping is also a primary concern for Canadian shoppers, with 72 percent abandoning their order if they perceive the postage costs to be too high.40 Alerting customers to minimum spend thresholds and offers around free delivery could help convert baskets to sales.41

 

Clear, image-rich apps key to mobile sales success

 

Canada’s mobile commerce market accounts for 36 percent of all e-commerce sales,42 similar to the U.S. figure (38 percent).43 Domestic merchants recognize the importance of developing their mobile commerce offerings, with 72 percent believing that adopting mobile technologies is a matter of survival.44 This market is predicted to expand at a compound annual growth rate of 18.5 percent to 2021,45 to reach a value of $32.7 billion (CAD43.6 billion).46 Perhaps, unsurprisingly, smartphone use is highest among younger age groups, with 85 percent of 18 to 34-year-olds using their devices on a daily basis, compared with just 30 percent among those aged 55 plus.47

 

Clear interfaces key to converting browsing to sales

 

Apps have become the dominant mobile commerce channel, used for 51.4 percent of all transactions completed on handheld devices.48 Clear images and typefaces are essential when selling to Canadians via mobile platforms. Those who still prefer to use desktops cite confusing information fields, and images and fonts that are not clear enough or too small, as the most common reasons for not adopting a smartphone-first shopping approach.49

Voice assistants are also emerging as a facility to encourage online shopping. They enjoy high uptake in Canada, with one in five households owning one.50 Forty-two percent of owners use their voice assistant to shop online, offering an emerging sales channel for merchants to be aware of.51

 

Cards dominate as market regulations get up to speed
 

As the principal way to pay online in Canada, cards are used for 62 percent of all e-commerce transactions, representing $29 billion (CAD38.7 billion) in annual sales.52,53 Debit card ownership outstrips credit cards – there are 2.1 debit cards in circulation per capita, more than double that of credit cards, which stand at 0.79 cards per capita. 54 This suggests a preference for paying for products outright, rather than taking on debt, in this affluent nation. Although other payment methods are increasingly being used, cards will maintain their dominance of the Canadian market out to 2021.55

At present, digital wallets are the second most-used payment method, accounting for 18 percent of the payments market.56 Popular platforms include PayPal® and Visa® Checkout.57 But digital wallets are predicted to grow at a rate of 23 percent per year to take a 22 percent share of the payments market by 2021.58

Bank transfers are used for 12 percent of payments, and are also growing rapidly.59 Use of this method is driven by domestic provider Interac, which is popular with domestic merchants.60 The ongoing availability of cash payments, which are used for a small percentage of transactions, could be due to services such as Canada Post’s Collect on Delivery service, which allows users to pay with cash when their item arrives.61

Canada is improving both its payment systems infrastructure and the associated regulations framework. A real-time payment rail system is currently being developed to enable instant settlement of low-value payments. Consumers will also be able to make payments using identifiers, such as a mobile number or their email address. This technology update is intended to encourage innovation in the payments space as banks, payment service providers, e-commerce merchants and mobile providers will all be able to overlay their own services on top of the real-time payment rail system. The platform is expected to be live by 2020.62

As of 2018, the 39-year-old Canadian Payments Act is now set to be reviewed every three years to ensure regulations remain current and fit for purpose. This follows a number of amendments and updates to the Act in 2015 to reflect more modern payment methods.63

 

Communication on security is vital for building trust

 

Some 64 percent of Canadians who do not choose to shop on the internet are concerned about the online security of their personal information.64 Among those who do shop online, 21 percent have abandoned a cart because of concerns about the safety of their personal information.65 Merchants can help attract business by providing clear information to customers about their security measures as well as highlighting relevant trustmarks to boost confidence.

 

Key takeaways

 

Although cross-border shopping only accounts for 17% of purchases made online in Canada, two-thirds of Canadian consumers have already made a purchase from abroad. Unsurprisingly, the U.S. is the main destination for consumers looking to shop on foreign platforms. Indeed, for U.S. companies, Canada offers a particularly convenient cross-border opportunity with similar taxes, fees and shipping safety. However, Canada’s linguistic duality (English and French are official languages) can present an obstacle for international merchants, sometimes requiring them to offer multilingual customer care and sites in order to be successful. Merchants should offer multiple payment options, but cards are comfortably the most popular way for Canadians to pay for their online purchases.

 

Data may vary from historical figures, due to certain categories being re-stated as new information sources have become available.

* J.P. Morgan 2019 Payments Trends – Global Insights Report includes the following countries: Australia, Brazil, Canada, China, Hong Kong, India, Indonesia, Japan, Malaysia, Mexico, New Zealand, Singapore, Thailand, Turkey, U.S., Vietnam.

 

For more information, please contact:

Your J.P. Morgan Relationship Manager or visit: https://www.jpmorgan.com/country/US/en/merchant-services/payment-insights

 

In preparing this presentation, we have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources or which was provided to us by or on behalf of the Company or which was otherwise reviewed by us.  The statements, views, and opinions that will be expressed during the presentation are those of the presenters and are not endorsed by, or reflect the views or positions of, Chase.  The information herein may not take into account individual client circumstances, objectives or needs and is not necessarily intended as a recommendation of a particular product or strategy to the Company and Company shall make its own independent decision. Chase is not liable for decisions made or actions taken in reliance on any of the information covered during the presentation. Furthermore, Chase makes no representations as to the actual value which may be received in connection with a transaction or use of the products and services mentioned nor the legal, tax or accounting effects of consummating a transaction.  

Chase, Chase Paymentech, Chase Merchant Services, JPMorgan and JPMorgan Chase are marketing names for certain businesses of JPMorgan Chase & Co. and its subsidiaries worldwide (collectively, “Chase”) and if and as used herein may include as applicable employees or officers of any or all of such entities irrespective of the marketing name used.  Products and services may be provided by commercial bank affiliates, securities affiliates or other Chase affiliates or entities.  In particular, securities brokerage services other than those which can be provided by commercial bank affiliates under applicable law will be provided by registered broker/dealer affiliates such as J.P. Morgan Securities LLC, J.P. Morgan Institutional Investments Inc. or by such other affiliates as may be appropriate to provide such services under applicable law.  Such securities are not deposits or other obligations of any such commercial bank, are not guaranteed by any such commercial bank and are not insured by the Federal Deposit Insurance Corporation.  Not all products and services are available in all geographic areas. Eligibility for particular products and services is subject to final determination by Chase or its affiliates/subsidiaries.

IRS Circular 230 Disclosure:  Chase does not provide tax advice.  Accordingly, any discussion of U.S. tax matters included herein (including any attachments) is not intended or written to be used, and cannot be used, in connection with the promotion, marketing or recommendation by anyone not affiliated with Chase of any of the matters addressed herein or for the purpose of avoiding U.S. tax-related penalties.

© 2019 JPMorgan Chase & Co

Global Payments Trends Reports

International e-commerce success can hinge upon understanding the needs, nuances and growth patterns of individual nations. J.P. Morgan’s Global Payments Trends Reports aims to offer merchants the knowledge they need for global success through in-depth, country-by-country analysis.

 

1 Economic Research, J.P. Morgan Chase Bank, March 2019.

2 Economic Research, J.P. Morgan Chase Bank, March 2019.

3 Economic Research, J.P. Morgan Chase Bank, March 2019.

4 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Statista 2017.

5 Export.gov, December 2018. ‘Canada – eCommerce.’ Accessed March 2019.

6 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via World Bank, Statistics Canada, 2017.

7 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via World Bank, Statistics Canada, 2017.

8 World Bank Open Data. ‘Canada.’ Accessed March 2019.

9 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Global Ecommerce Report, Canada Post growing e-commerce in Canada, 2017.

10 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2019.

11 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided by Edgar, Dunn and Company via The Canadian Internet Registration Authority, 2017.

12 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via World Bank, 2017.

13 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Catalyst CA, 2016, Statistics Canada, 2017.

14 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via World Bank, Statistics Canada, 2017.

15 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Bank of Canada, World Bank, 2017.

16 Export.gov, December 2018. ‘Canada – eCommerce.’ Accessed March 2019.

17 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2017.

18 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via The Canadian Internet Registration Authority, 2017.

19 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via United States Ecommerce Foundation Report, 2017

20 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Global Ecommerce Report, Canada Post growing e-commerce in Canada, 2017.

21 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via World Bank, Statistics Canada, 2017.

22 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via World Bank, 2017.

23 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via E-commerce Foundation, Global Ecommerce Report, Canada Post growing e-commerce in Canada, 2017.

24 Export.gov, December 2018. ‘Canada – eCommerce.’ Accessed March 2019.

25 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Statista 2017.

26 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via World Bank, 2017.

27 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Ecommerce Foundation, 2017.

28 Credit Suisse, October 2019. ‘Global Wealth Report 2018.’ Accessed March 2019.

29 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2017.

30 Export.gov, December 2018. ‘Canada – eCommerce.’ Accessed March 2019.

31 Export.gov, December 2018. ‘Canada – eCommerce.’ Accessed March 2019.

32 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2017.

33 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2017.

34 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Global Ecommerce Report, 2017.

35 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Global Ecommerce Report, 2017.

36 Ayima.com, 2018. ‘2018 Canadian E-Commerce Monitor.’ Accessed March 2019.

37 Ayima.com, 2018. ‘2018 Canadian E-Commerce Monitor.’ Accessed March 2019.

38 Ayima.com, 2018. ‘2018 Canadian E-Commerce Monitor.’ Accessed March 2019.

39 Export.gov, December 2018. ‘Canada – eCommerce.’ Accessed March 2019.

40 Ayima.com, 2018. ‘2018 Canadian E-Commerce Monitor.’ Accessed March 2019.

41 Ayima.com, 2018. ‘2018 Canadian E-Commerce Monitor.’ Accessed March 2019.

42 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via The Canadian Internet Registration Authority, 2017.

43 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via United States Ecommerce Foundation Report, 2017.

44 iPhoneinCanada.ca, May 2017. ‘76% of Canadian Retailers Believe Mobile Commerce Way of the Future: Report.’ Accessed March 2019.

45 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2019.

46 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2019.

47 Ayima.com, 2018. ‘2018 Canadian E-Commerce Monitor.’ Accessed March 2019.

48 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via News Wire Canada, 2017.

49 Ayima.com, 2018. ‘2018 Canadian E-Commerce Monitor.’ Accessed March 2019.

50 Ayima.com, 2018. ‘2018 Canadian E-Commerce Monitor.’ Accessed March 2019.

51 Ayima.com, 2018. ‘2018 Canadian E-Commerce Monitor.’ Accessed March 2019.

52 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2017.

53 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2017.

54 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Bank of Canada, World Bank, 2017.

55 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2017.

56 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2017.

57 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2017.

58 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2017.

59 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2017.

60 Interac.ca, 2019. ‘Interac® Online for Consumers.’ Accessed March 2019.

61CanadaPost.ca, 2019. ‘Everything you need to know about sending or receiving a parcel Collect on Delivery.’ Accessed March 2019.

62 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Payments Canada, 2017.

63 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via The Government of Canada, 2017.

64 Ayima.com, 2018. ‘2018 Canadian E-Commerce Monitor.’ Accessed March 2019.

65 Ayima.com, 2018. ‘2018 Canadian E-Commerce Monitor.’ Accessed March 2019.