E-commerce Payments Trends

E-commerce Payments Trends: Canada

Canada e-commerce insights


Canada’s homegrown e-commerce market has been slow to develop, creating a strong cross-border shopping culture. With double-digit e-commerce 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 Canada’s online shoppers. 

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.

Canada’s e-commerce market trends: Strong growth in wealthy, internet-savvy market

 

Canada’s 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 e-commerce 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 in Canada has been relatively slow to develop, 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 e-commerce growth

 

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 on online shopping,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 purchases account for 16.7 percent of online shopping in Canada,32 accounting for $7.7 billion (CAD10.3 billion) in total annual sales.33 Some 67 percent of Canada’s 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 delivery expectations of Canada’s online shoppers

 

Amazon is Canada’s most popular website, with 21 percent of Canada’s 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 Canada’s online 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 e-commerce growth.41

Clear, image-rich apps key to mobile e-commerce growth in Canada

Canada’s mobile e-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 e-commerce offerings, with 72 percent believing that adopting mobile technologies is a matter of survival.44

Canada’s e-commerce 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 in Canada 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

 

Canada’s online shoppers need clear interfaces to convert browsing to sales

 

Apps have become the dominant mobile commerce channel in Canada, used for 51.4 percent of all transactions completed on handheld devices.48 Clear images and typefaces are essential when selling to Canada’s online shoppers 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 Canada’s online shoppers. 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


Canada’s e-commerce payments trend: Cards dominate as market regulations updated  

 

As the principal way to shop 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 Canadian e-commerce payment trend for paying for products outright, rather than taking on debt. Although other payment methods are increasingly being used in Canada, 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 payment method in Canada 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 Canada’s online shoppers to pay with cash when their item arrives.61

Canada is improving both its payment methods 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

Security vital to build trust with Canada’s online shoppers

 

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

 

Key takeaways

 

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

 

To learn more about payment trends in the world’s leading e-commerce markets, contact your J.P. Morgan representative or call us on:

US: 1-800-708-3739

UK: 0845-399-1130

Europe: +353-1-726-2909

E-commerce Payments Trends

International e-commerce success can hinge upon understanding the needs, nuances and growth patterns of individual nations. J.P. Morgan’s E-commerce Payments Trends 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.

 

About J.P. Morgan

 

J.P. Morgan offers a full suite of payments services to enable a seamless connection across the payments continuum for clients. We bring our consultative expertise, data-driven insights, and local service around the globe to provide a more unified view of payables, receivables and cash management. Merchant Services is the payment acceptance and merchant acquiring business of JPMorgan Chase & Co. (NYSE: JPM) – a global financial services firm with assets of $2.6 trillion and operations worldwide.i According to The Nilson Report, it is also the top merchant acquirer of e-commerce transactions in Europe.ii

 

JPMorgan Chase & Co. Q4 2018 Earnings Report 2018.

ii The Nilson Report, #1132 May 2018.

This document is based on projected figures and is subject to change at any time. Data may vary from historical figures, due to certain categories being re-stated as new information sources have become available.

Information contained in this document has been prepared by third parties or obtained from sources which are believed to be reliable; but neither Chase Paymentech Europe Limited nor any of its affiliates warrant the completeness or accuracy of the information contained herein. Chase Paymentech Europe Limited and any of its affiliates shall have no liability to the user or to third parties, for the quality, accuracy, timeliness, or for any special, indirect, incidental or consequential damages which may be experienced because of the use of or reliance on the data or statements made available herein. Third party trademarks, brand names, products and services are only referential and Chase Paymentech Europe Limited and its affiliates disclaims any sponsorship, affiliation or endorsement of or by any such third party.

 

Chase Paymentech Europe Limited, trading as J.P. Morgan, is regulated by the Central Bank of Ireland. Registered Office: J.P. Morgan, 200 Capital Dock, 79 Sir John Rogerson’s Quay, Dublin 2 D02 RK57, Ireland. Registered in Ireland with the CRO under the Registration No. 474128.

Directors: Brian Gaynor, Carin Bryans, Dara Quinn, Steven Beasty (US), Eilish Finan

Copyright© 2019