Most merchants are happy to put the pandemic behind them. Shops and restaurants are open. Social distancing is no longer necessary. Beauty and personal services are on offer again with no restrictions.
Even so, merchants shouldn’t put the pandemic entirely behind them. It caused a seismic shift in consumer behaviour with lasting effects on Canadian payment preferences. Physical shopping has made its comeback, but it’s not happening with cash. Instead, digital payments from e-commerce to mobile have made permanent inroads into the payment landscape.
Merchants that are ready to meet the full range of payment preferences will score points with shoppers and win big at checkout – whether it’s online or in store. Here are the big changes worth paying attention to.
From cash to digital
When’s the last time you visited an ATM or had a pocketful of twonies and loonies? Most people have to pause and think to answer that question. Canada is closer than it’s ever been to becoming a cashless society.
Canadian consumers started moving away from cash years ago. However, the need for contactless payments dramatically accelerated the shift. According to a 2022 white paper from Interac, in-person cash payments made up 54% of payments in 2009. By 2020, cash was used just 17% of the time. As credit card, debit, and digital payments take precedence, cash is unlikely to make a comeback.
Supporting local businesses
During the pandemic slowdown, Canadians could no longer rely on their usual errand runs, shopping routes and work-day snack and lunch habits. The combination of remote work and supply chain problems led people to look closer to home for necessary goods and services. With choices diminished and Canadians living more locally, 45% of Canadian shoppers went outside their comfort zones and made purchases from retailers and brands they’d never tried before.
This shift was a boon for local retailers. Consumers discovered shops in their own neighbourhoods and were eager to support local businesses to help keep them afloat. A 2021 study showed that Canadians were happy to pay five dollars more for products from local businesses than purchase the same products from large online retailers. Now that people are returning to stores, it’s important for those local shops to keep their payment preferences up to date and return the favour to the customers who helped them weather the storm.
E-commerce payments grow from online shopping
When regulations and consumer preferences curtailed in-store shopping during the pandemic, businesses and shoppers flocked online. E-commerce hit its peak in April 2020, when nearly one out of every four purchases were made online (22%, according to the Interac white paper).
That number now appears as a peak high. The Interac report showed that e-commerce payments have dipped and now make up 16% of total purchases. However, that experience has permanently changed Canadian consumer behaviour. Even after shoppers returned to malls, restaurants, beauty services, and local boutiques, they continued to shop online. E-commerce is far more popular than it was before the pandemic. It’s carved out a permanent place alongside in-store shopping.
In fact, what merchants are seeing now is consumers who engage both modes of shopping: the digital and the physical. People like to shop online to see whether a product is in stock, then go purchase in store. They also observe the reverse, with consumers visiting in-store to see and compare items firsthand, then following up with an online purchase.
Either way, retailers need to support seamless and preferred payment solutions online and in store. These days, that means offering more than just credit card payments, but accepting debit and mobile payments from digital wallets. Retailers might also consider supporting payment platforms and payment methods that their key demographics prefer.
Buy now, Pay Later
Another popular payment option gaining traction in Canada is Buy now, pay later (BNPL). This service lets shoppers make purchases now, but pay off the total price over a series of intallments, usually automatically charged to a credit or debit account, often with no interest.
Younger Canadians are growing increasingly fond of this option. Without an extensive credit history already built up, it’s harder for this up and coming demographic to obtain loans. Still, they need basic items to get ahead, from books for university, clothes and technology for work, accessories for their first cars, and housewares furniture for their first apartments. BNPL lets them manage their finances and make smaller, convenient digital payments for the supplies they need to thrive.
Seamless support across preferred payment methods
As new payments methods gain popularity, merchants need robust transaction support to deliver seamless efficiency and remove friction from the checkout process. When a checkout lineup gets too long or a complex transaction holds up other shoppers, the frustration is obvious. Experienced merchants have methods for easing bottlenecks so they don’t lose sales.
Retailers who have opened online portals during or after the pandemic need to put the same kind of frictionless experience in place for e-commerce transactions. A 2022 study by the Baymard Institute shows that 69.99% of customers fill their digital shopping carts only to abandon them later in the process. A complicated checkout process, high delivery costs, and the need to create an account before purchase are among the many reasons for cart abandonment.
Critically, 9% of shoppers in that study cited the lack of payment methods as a reason for not following through with an online purchase. E-commerce retailers therefore need to do everything they can to remove obstacles and convert the growing numbers of online customers into sales. This is especially important for shop owners that cater to the younger generation. They’ve grown up with more digital payment options and expect the stores they love to offer payment choice, flexibility and convenience.
Embracing a new era for Canadian shopping
Merchants who keep their fingers on the pulse of consumer trends stand to gain in the days ahead. Given industry observations, digital payment methods are key to keeping Canadian shoppers happy. The goal, as always, is to reduce friction at checkout, both in-store and online, making shopping faster and easier for customers using the methods they prefer.
Those who succeed build goodwill and a long-lasting relationship among store visitors. Those who fail to adapt risk losing market share to competitors who are miles ahead with modern methods, added flexibility, and payment convenience.
OTT Pay offers a wide variety of digital payment services and solutions for the Canadian market. To learn more, visit https://ottpay.com/