Canadian Open-Loop Market Grows 17 Percent, According To New Study
A new survey released by the CPPO titled Canadian Open-Loop Market: 2016 has revealed that the open-loop card market in Canada has grown by 17 percent between 2015 and 2016. Growth in all nine active segments, including consumer, corporate, and government, has driven the market to $3.6 billion in total dollars.
The study, conducted by Mercator Advisory Group, also revealed the following:
- General-purpose reloadable card (cards loaded by consumers for personal finance use) loads totaled CDN $1.8 billion and the average load onto consumer-funded cards is $649.
- Open-loop gift card loads total $1 billion.
- The corporate incentive category is growing with $189M in total loads. The segment remains small versus the U.S. market showing strong potential for growth.
- The average load onto corporate-funded payment cards grew 11 percent, from $125 to $140, reflecting increased adoption by Canadian businesses to move cheque payments to payment cards.
“The Canadian open-loop [payment] market has experienced healthy growth in both total transactions and expansion into new segments that have been robust in other countries,” Tim Sloane, Vice President of Payments Innovation at Mercator Advisory Group said. “This data shows that open-loop products are becoming the go-to alternative to replace cheque payments for corporations and governments. There is also significant traction with consumers using the products as a tool that supplements their bank account.”
“Open-loop [payment] products continue to take a bite out of cheques, improving efficiencies, costs and security in the Canadian payments system,” said David Eason, CPPO chairman. “This data from the survey shows increased adoption across new categories and deeper into established verticals, but it also highlights the untapped potential for [electronic payments] in Canada.”
Corporations and governments are replacing paper cheques with electronic payments and payments cards to handle corporate disbursements, payroll, healthcare disbursements, disaster relief, student cards, employee incentives, and more. The Ontario Government provides payment cards for social assistance as a way to improve customer service, efficiency and security, and to improve programs for consumers. Likewise, the Alberta Government provided payment cards to victims of the Fort McMurray fires in order to give faster and safer financial relief than cheques.
Fintech companies are also hopping on the electronic payments train. Recognizing the demand from young Canadians to have quicker access to funds, companies are offering instant spending and replacing paycheques and direct deposits with this more secure, less costly, and faster form of payment. As well, financial institutions are using this forward-thinking form of payment to expand their services to remote and underserved communities, which is especially helpful for providing government benefits.
Looking to move your business or institution away from the hassle and expense of cheques? Contact us today to see how we can help transform your organization’s payment processing and provide you with forward-thinking electronic payments solutions.