Two Components Driving Growth Opportunities for Canadian Merchants
Two key components are driving growth opportunities for Canadian merchants: mobile and tourism. A growing segment of Canadians own smartphones and are beginning to use their phones for more than strictly phone-related tasks, making them an up-and-coming platform for commerce. On the tourism side, a growing number of international travelers are making Canada a destination and spending in stores across the country—and a few easy tactics can ensure merchants are opening their doors to accept cards from these travelers.
Key Mobile Data
With more than 68 percent of Canadians owning a smartphone in 2015, there’s no denying the growth in smartphones among consumers. And not only is smartphone ownership increasing, but smartphone users are reporting that their phones are their primary device for accessing the internet (as opposed to a laptop or desktop computer).
Globally, consumers are increasingly starting to use their smartphones for more than just calling, texting, and browsing email. Recent data shows a significant percentage of cash-less transactions are being made globally via mobile phones. According to global data from the 2015 World Payments Report, digital wallets account for approximately USD$8.2 billion in transaction volume on the conservative end, and USD$16.5 billion on the high end.
About 5 percent of the 600 million NFC-equipped smartphones worldwide will have been used to make an in-store NFC payment at least once a month last year according to Deloitte, a global research firm. This is a more than 1,000 percent increase from 2014. Therefore, even though mobile payments are still in their early stages of adoption, Canadian businesses should start to think about readying themselves for growth in the mobile payments space.
The key mobile payment applications to keep in mind are UGO and Suretap. They allow users to upload their credit card data and then tap their smartphone on an in-store terminal to complete a transaction. With multiple mobile payment players in the market, what does this mean for your business? In a nation of about 35 million people, UGO reports that it is on track to serve more than 100,000 unique users with 250,000 cards by the end of 2015. Data wasn’t available for users of Rogers-backed Suretap, but a look at the U.K.’s contactless payments market may shed light on how quickly mobile payments catch on.
In all, U.K. customers spent more than US$3.8 billion via contactless payment methods during the first half of 2015 (includes NFC-equipped credit cards). While contactless payment users in Canada are still low in number, if the U.K. figures are any indicator, it’s a key time for Canadian merchants to be asking how they can make their sales counters ready to accept mobile payments.
With the advent of mobile wallets, it is becoming possible to store everything from loyalty cards to credit cards—and with a greater level of security than simply carrying around a wallet. For retailers, imagine speeding up your checkout times during peak business hours. When customers can just tap and go, everyone in line benefits and the chance is reduced for a potential sale to walk out the door because the line was too long. And with store loyalty cards at customers’ digital fingertips, it’s easier than ever to reward repeat customers and increase customer retention and engagement.
Strong Tourism Growth
Turning to the tourism space, international travelers make up a key component of spending volume throughout Canada. In particular, U.S. tourists are the top source of international visitors to Canada, spending approximately CA$7.1 billion in Canada in 2014, and besides this demographic, visitors from around the globe spend about CA$5.6 billion.
According to the Canadian Tourism Commission, looking year-over-year from November 2014 to 2015, Canada experienced strong tourist increases from several key countries. Travelers from the U.S. increased by 11 percent, from South Korea by 20 percent, from India by 12 percent, and from Mexico by 10 percent. Overall, Canada saw a 9 percent increase in arrivals year-over-year as well, showing that tourism in Canada continues to grow. (Source)
So, how can Canadian merchants best prepare for the incoming spend of international consumers?
First, conduct an evaluation of your current acceptance capabilities. Make sure you can accept a wide variety of payment types so that tourists can pay using their card of choice. One strategy to ensure you can welcome tourists from around the globe is through Discover Global Network acceptance. Discover Global Network has alliances with networks all over the world, and acceptance means you can do business with cardholders from top inbound countries to Canada like the U.S., China, India, and many more. To better understand the payment brands and types you can accept, contact your payment service provider.
Looking Ahead and Embracing Change
As payment variety and technology continues to grow and change around the world, it will be important to evaluate the potential for adjustments along the way that allow you to grow with these changes. Speak to your merchant services provider about enhancing your acceptance capabilities and considering emerging forms of payment, such as mobile. However you choose to make your store ready for payments, keep an eye on the future, and remember: It’s about ease and convenience for your customers. A little legwork early on can prove lucrative in the long run and put you ahead of the store next door.