The US is relatively unique in that mobile proximity payments are increasingly popular despite the absence of a contactless cards market. Meanwhile in Canada, consumer interest in mobile proximity payments remains muted.
According to GlobalData’s Cards and Payments Market Drivers, the US had a 55% smartphone penetration in 2015, compared to 49% in Canada. While the US mobile payments market is highly competitive and features a wide range of brands, it is less fragmented than the cards market. Most of the big brands are available to consumers regardless of who they bank with, and Apple Pay in particular has a partnership with almost every retail bank in the country.
Canadian banks including RBC, CIBC, ATB Financial, and Canadian Tire Bank have also sought to drive growth in the Canadian mobile payments market by partnering with Apple. A number of other recent initiatives – including the launch of a contactless mobile payment service for Android by American Express, and Scotiabank’s My Mobile Wallet – are looking to attract Canadian consumers to mobile proximity payments.
Yet mobile wallet ownership stands at 16% in Canada, significantly below the global average of 29% and that of the US at 33%. The majority of Canadian consumers don’t have a mobile wallet and have no interest in getting one, showing that key players in the payments market need to put significant effort into driving interest in mobile payments. 12% of Canadians carry out m-commerce transactions, compared to 16% of their US peers. However, m-commerce is forecasted to display stronger growth in Canada, with a CAGR of 26% compared to only 12% in the US over 2015–20. Mobiles will increasingly be used for impulse buys and small purchases at home or on the move, as consumers become increasingly comfortable with the form factor and with storing their card details on merchant sites or apps to enable quick checkouts.
By Nicolae Bacila, Consumer Payments Analyst