How COVID-19 Could Alter the P2P Mobile Payments Scene in Canada

How COVID-19 Could Alter the P2P Mobile Payments Scene in Canada

The COVID-19 pandemic has brought change that no one could have thought possible even a few months ago. Social media is full of stories of workers amazed how much work can be done from home when we are forced to. Major newscasts are being put on air with journalists working from their kitchen tables, teachers are conducting classes from their living rooms, and traders are managing millions (if not billions) of dollars from their home office.

When forced to do something, all seems possible.

In Canada this is true for the peer-to-peer (P2P) mobile payment market as well. These are transactions or money transfers made using the internet. This contactless way of moving money has been gaining popularity since the pandemic started. From paying your housekeeper to transferring money to a relative in need, P2P is safer during COVID-19. The online technology allows customers to transfer funds from their bank account or credit card to another individual’s account.

Customers who have never used P2P payments are quickly learning how to use it while social distancing to pay, send and receive money. Consumer behaviour shifted during the pandemic because it has to: Cash is no longer king and digital payments reign supreme, forging new behaviours that are likely here to stay.

But when it comes to P2P, Canadians have slim options. Interac e-transfer remains the big player in the P2P payment market. That may change after the pandemic ends and customers demand more choice with P2P giving way to alternative players that have been serving customer in the U.S., Europe and Asia to enter the market, namely: PayPalTencentSquare, Inc., Circle Internet Financial Limited, clearXchangeAnt FinancialSnapCash, among others.

The good news is that P2P payments were showing momentum even before the pandemic started. Canada’s leading P2P platform Interac e-Transfer says in 2019, Canadians made 511 million Interac e-Transfer transactions, with a total volume of $175.9 billion.

Interac also reports that “contactless spending, hit a high in mid-March coinciding with COVID-19 bulk buying behaviours.” The suspect that will slow down as the rush to bulk buy subsides, but the habit of how we are shopping contactless will remain.

In Canada, P2P has lots of room to grow as usage still lags behind places like the U.S.

For example, marketing company e-Marketer recently estimated in 2020, 19.7 per cent Canadians will be P2P mobile users. But this number is much less than the U.S. where more than 30 per cent of their population has used a P2P mobile payment in the last month.  Their research also finds, Zelle, Venmo and Cash App have significant user bases in the U.S. that will fuel a nearly $400 billion market in 2020.

Globally the P2P market is set to balloon too. With payments and lending.  According to report published by Allied Market Research, the global peer to peer (P2P) lending market generated $67.9 billion in 2019, and is estimated to reach $558.9 billion by 2027, registering a compound annual growth rate (CAGR)of  29.7 per cent from 2020 to 2027.

The Allied Market Research report find that’s when it comes to P2P North America contributed the highest share, accounting for more than two-thirds of the total market share in 2019, and will maintain its dominance throughout the forecast period. However, Asia-Pacific is expected to grow at the highest CAGR of 40.4 per cent from 2020 to 2027.

If smaller outfits were to come to Canada that could integrate with the banks the way Interac e-transfer does, customers could find they have more choice to use P2P money transfers and possibly be more likely to use it.

Meantime as the pandemics continues, more Canadians will be encouraged to use P2P payments. Some because they find it convenient, but others because they are being forced to change their old payment habits that no longer feel safe in the post COVID-19 world.

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