Whether you tap, swipe, or hover, use a card, mobile device, or digital wallet, whether you’re online, in-store, or abroad – we don’t think twice about how convenient payment is these days. Recent data from the World Bank shows that over 80% of Canadians use credit cards and over 95% use debit. But it took decades and several revolutions in technology to get us here.
Are you old enough to remember needing coins and paper bills to pay for things, big or small? Fiat currency was the norm until 1958 when credit cards were introduced. That was the first big shift in payment systems.
Although credit cards are ubiquitous today, they were newfangled inventions at the time. Paying for goods and services with rectangular pieces of plastic, not cash, was a truly amazing experience. It relied on a labour-intensive manual processing system that underpinned a complex system of borrowing and lending. The credit card provider lent the purchase cost to the customer and guaranteed payment to the merchant. The customer, in turn, guaranteed payment to the credit card provider at a later date. It might seem primitive now, but it was at that moment that the cashless society was born.
At the time, this was a closed system. It remained slow, cumbersome, and dominated by a small group of companies throughout the 1960s and early 1970s. To gain business efficiency, credit card companies started using electronic credit card terminals in the late 1970s. These provided more direct connectivity between merchants and credit card provider, making verification more secure. This improvement helped build merchant and customer trust and led to expanded adoption of credit cards and everyday use.
Technology and networking advanced in the 1980s, ushering in the era of electronic payments. However, payment processing remained extremely centralized, dominated by large companies that had sufficient market reach and resources to build and implement these expensive systems. Electronic payments were a spectacular innovation, but with only a few proprietary systems to choose from, merchants and end consumers weren’t left with much choice.
Everything changed in the mid-1990s with the advent of the internet. Financial technology (fintech) innovators were now able to create and deploy innovative software solutions without having to build their own networks. The internet provided a vast interconnected system on which smaller innovators could operate their own payment processing systems. The result was a proliferation of payment processing options and a technological revolution in payment technology.
Big companies like Mastercard, Visa, and American Express realized that it was better to work with this new group of organizations. The fintech organizations were already specialists in developing tools to manage transactions, as well as serve a range of more tailored payment processing needs. As the payments industry expanded, and competition and innovation exploded, a new era of payment history began: The era of payment gateways.
In simple terms, a payment gateway is a special payment processing software used by merchants to handle payments. As the possibilities for payment technology and processing grew, more fintech companies emerged that provided more, and better, payment gateway solutions. At the same time, the internet was evolving. It ceased being a place only to share information and get news – it was a place to transact business and buy things. E-commerce exploded, and payment gateways were essential to enable those transactions. The combination of online e-commerce and payment processing technology has reshaped not only our consumer world, but the patterns of our daily lives.
Until that point, the big players concentrated on a one-size-fits-all model. Every merchant in every sector and every consumer demographic had been treated largely the same way. The emergence of payment gateway software carved out space for more variety in the payment processing market. With an ability to gain insight into specific markets and customer bases, fintechs could tailor payment gateway solutions and technologies to meet specialized needs.
Many payment technology and fintech innovators have gone on to establish a firm presence in markets around the world by providing high quality, tailored solutions for niche markets. Canadian fintech company OTT Pay, for instance, has become a trusted partner of merchants throughout the Canadian commercial sphere by tailoring payment services to the Chinese marketplace. With deep insight into Chinese payment preferences and needs, Chinese consumer trends and buying patterns, as well as payment technology expertise OTT Pay has developed payment solutions that ideally serve this market. In a recent example of fintech innovation and e-commerce synergy, OTT Pay developed a Shopify plug-in that enables Canadian retailers to process payments from two of the most popular Chinese payment providers: WeChat Pay and UnionPay.
Innovations like this do a lot more than offer payment convenience to underserved customers. They bring substantial benefits to the national economy. Data from Statistics Canada indicates that population of Chinese people in Canada is over 1.7 million. The same data source shows that 749,000 trips were made from China to Canada in 2019, making China a huge source of overseas travel for the Canadian market. Another source estimates that Chinese travelers contribute over $1 billion annually to the Canadian economy. Data from Statista shows that international students in Canada from China numbered 105,265 in 2021. In addition to basic living expenses, each student spends between 20 and 50 thousand dollars a year in tuition. Catering to the desires and needs of these communities with tailored payment solutions makes their financial lives easier and more convenient, drives revenue for the Canadian merchants serving them, and benefits the economy overall.
OTT Pay continues to innovate and lead in fintech and e-commerce with payment processing solutions for multiple channels. It now offers a full suite of integrated payment solutions and tools, including in-store terminals, point-of-sale integrations, online plug-ins, and APIs. OTT Pay also provides effective and tailored e-commerce and marketing solutions to help drive business for Canadian merchants.
A brief look at payment technology history can’t predict what fintech’s next chapter might look like. However, it’s certain to be led by those that respond to today’s needs while embracing the future. Companies like OTT Pay already connect Canadian merchants and Chinese consumers with the latest, quickest, safest, and most seamless payment experiences possible. They’re sure to be at the forefront of the next phase of payment technology innovation.