ANALYSIS: What’s keeping Canadians from shopping with a digital wallet?

Close up woman paying using smart phone contactless payment in store.
Close up woman paying using smart phone contactless payment in store. Getty Images

With Christmas approaching and Black Friday just behind us, we are very much in the middle of “shopping season”. Given the time pressures everyone faces this time of year, many Canadians will look for the easiest, fastest, most convenient way to pay for their purchases and move on to the next store. Many would love to be able to tap their phone and go.

However, despite high levels of smartphone ownership and relatively high awareness of the big three mobile payment options —Apple, Android and Samsung— only seven per cent of Canadians used a digital wallet in the past six months (ending in September). This compares to over four-in-10 Canadian adults who made a purchase by tapping a contactless credit or debit card and the six-in-10 Canadians who say that it is likely that more than three-quarters of their purchases will be through their smartphone in the next 10 years.

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Compatibility before Convenience

However, the tap-and-go ease and convenience of a digital wallet is unlikely to be realized for most Canadians until there is a single mobile payment system which supports all types of cards, including credit/debit as well as retail, gas, loyalty/reward and gift cards and until mobile payment platforms are compatible with all financial providers and mobile devices.

This lack of compatibility leaves the typical cardholder facing a confusing and potentially frustrating choice of which mobile payment system to use.
Android Pay, for example, is only supported by three of Canada’s Big 5 banks. But compatibility is improving.

Apple Pay initially only supported cards from American Express but it has since expanded to be compatible with all five of the country’s largest banks, among others, along with MasterCard and Visa, as well as Interac debit cards. Samsung Pay recently expanded to include two of the country’s Big 5 banks, along with ATB and Interac debit cards, as well as all three major credit card networks, after launching in Canada in late 2016 with support for just CIBC Visa credit cards.

READ MORE: Could mobile payments lead you to overspend? How to keep your budget in check

These factors, as well as the relative newness of the three Pay systems to Canada, help explain why awareness and usage still have plenty of room to grow. By Fall 2017, while nearly six-in-10 cardholders were aware of Apple Pay, about half knew about Android Pay and four out of every 10 were familiar with Samsung Pay.

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More retailers need to accept these payments

Another factor limiting the growth of tap and go in Canada is that many retail locations have yet to convert to point-of-purchase terminals which support contactless payments. As the number of compatible terminals continues to expand, the use of contactless cards will likewise grow further, as suggested by the fact that 60 per cent of credit/debit cardholders are aware of being able to make a purchase using a digital wallet.

The early adopters will be men aged 18 to 34, the same people who became the first users of mobile banking a decade ago and who are also the most optimistic about the impact of a wide range of technologies ranging from autonomous cars to workplace robots.

Security is a concern

More than half of all Canadian credit/debit cardholders express concern about the security of mobile payments, indicating that financial institutions and tech firms alike, have more work to do to reassure Canadians that paying by smartphone is as secure or even more secure than the familiar physical card. Again, those most likely to accept digital wallets as secure are aged 18 to 34.

But do people really want digital wallets?

The other factor to slow customer adoption isn’t technical at all. It’s a matter of whether or not people need and want a “digital wallet.”

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Canadians have long been accustomed to swiping or inserting chip cards. Payment by tap just makes the transaction that much faster and frictionless. When asked which is more convenient when making a purchase at a physical location, over half of cardholders answered a credit or debit card, compared with just 11 per cent who favoured using mobile payments, though this rose to 19 per cent among those aged 18 to 34 years.


In some ways, the credit card industry has only itself to blame for the slow adoption of mobile payments, by making the incumbent plastic card so easy and pain-free to use. And cardholders never have to worry about the battery running down when using a card.

All this to say, until we see a fully compatible, fully supported, true digital wallet we can expect to stand in line this shopping season (at least those of us who still go to stores to shop) and wait while the people in front of us search for the credit cards.

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