Digital wallets: How Canadian merchants stand to benefit

The easy and fast payment method gaining in popularity

The payments landscape in Canada is changing at a faster pace than ever. Consumers across the country adopted new habits over the past few years changing how they shop and interact with merchants. Thanks to trends such as the adoption of eCommerce and Unified Commerce, shoppers are demanding more flexibility in how they’re able to make payments.

Digital wallets have become an important choice for retailers to offer, with over 29% of Canadians having completed a purchase using a digital or mobile wallet. With options such as Apple Pay, Google Pay, and WeChat Pay gaining in popularity, shoppers are regularly using their mobile devices and accounts to make payments in person and online. But knowing exactly how to implement a digital wallet can make a difference in your customer's shopping experience.

What is a digital wallet?

A digital wallet stores your payment information, and with it, you can pay online and in person. Mostly it’s a mobile app, but a digital wallet can also be a software program on your desktop or built into your browser.

A digital wallet can effectively replace the need for physical payment cards. Some types also let you make peer-to-peer payments, ATM withdrawals, and pre-load funds. Others store more than payment information. You can save loyalty cards, vouchers, tickets, and more in the same place.

Digital wallets vs. mobile wallets

Digital and mobile wallets are very similar, but slightly different.

Different digital wallets - phone, watch, laptop

“Digital wallet” is a blanket term that includes mobile wallets. A digital wallet can be installed on your mobile device, laptop, or desktop computer. But a mobile wallet, like Alipay or WeChat, works only for mobile devices, such as smartphones and smartwatches. When it comes to online payments, digital wallets are the second most popular form of payment among Canadian shoppers.

Benefits of accepting digital wallets

Wider acceptance and reach

Canada, with its world leading diversity attracts shoppers from across the world. Shoppers from the United States may prefer to use options such as Amazon Pay and Apple Pay, while those from Asia may prefer alternatives such as WeChat Pay and GrabPay. The more flexibility your payment solution is able to provide, the more comfortable those considering a purchase will feel.

Beyond expanding your attractiveness to visitors from different geographies, digital wallets are also more popular amongst younger shoppers thanks to their integration with mobile devices. More than half of shoppers between the ages of 18-23 report using digital wallets to pay for purchases.

Young woman paying on mobile with fingerprint at retail store

Stable and high conversion rates

Offering digital wallets make the payment moment faster and easier for your shoppers. With smartphone penetration in Canada reaching 90%, the payment tool for many is right there. Customers won’t need to look for their credit card or fill in card details manually with a digital wallet.

Plus, they can verify their identification seamlessly with a fingerprint or facial recognition rather than typing their password. This lets customers pay with less clicks or taps, and with much less friction at the checkout, which leads to higher conversion rates.

High level of security and low fraud rates

The customer’s payment information is never shared directly with the merchant thanks to tokenization. Instead, a unique payment token, accompanied by a cryptogram that expires after one use, makes the chance of a fraudulent payment extremely low.

Strong Customer Authentication (SCA) is built-in by design for some digital wallets. The customer needs to verify every transaction with a password, fingerprint, or facial recognition, amongst other verifications. This makes digital wallets more secure than card payments, where identity verification isn’t always required. The higher level of security can also mean lower interchange and card scheme fees for some digital wallets.

Top digital wallets in Canada

According to Payments Canada, 29% of Canadians had used mobile payment or digital wallet in 2020. Since then, this number is estimated to have grown substantially. With many options available for shoppers, from market leaders such as Apple Pay, to niche alternatives such as Alipay, understanding the landscape can take some time. Below are the top digital wallet methods available for Canadians, sorted by popularity.

Apple Pay
Apple launched its wallet back in 2014, available on iPhones, Apple Watches, Macs, and iPads. With over 500 million users, it supports in-person payments and transactions made on iOS apps and Safari. As of 2022, 47% of Canadian shoppers report using Apple Pay to make an in-store purchase.

Google Pay
Google Pay™ came about in 2018 after the unification of Google Wallet and Android Pay. It can be used in store, via Android apps, or online in the Chrome browser using card details saved to a Google account.As of 2022, 31% of Canadian shoppers report using Google Pay to make an in-store purchase.

PayPal has over 6.4 million users across Canada. It’s currently an online purchase tool only, so it can’t be used for in-person payment directly. Instead, it provides a QR code that connects physical and digital. Customers can also opt for the Pay Later options (with no additional cost to your business).

WeChat Pay
WeChat Pay is a digital wallet born out of the Chinese super app WeChat. It currently boasts over 900 million monthly users with Chinese bank accounts. Now an ecosystem built for chatting, browsing items, and paying — all in one place — WeChat Pay can be used in-person and from desktop-to-mobile by scanning a QR Pay

With over 1.3 billion yearly active users, Alipay is the most widely used third-party online payments service provider in China. Users store their debit or credit card details in the app to be used online or in-store via a mobile device. Users can complete their payment up to 12 hours after it was initiated.

Samsung Pay
Samsung Pay allows users of Samsung mobile phones and devices to easily make payment in person. Instead of having to carry around plastic cards, shoppers are free to use their devices which link to many popular Canadian credit and debit cards. As of 2022, 19% of Canadian shoppers report using Samsung Pay to make an in-store purchase.

Learn more about payments in Canada

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