The payments industry in Canada, encompassing a cross-section of options ranging from credit and debit cards to cheques and mobile wallets, is valued at about $16 billion a year, according to Payments Canada. The yearly cost of processing all those exchanges is itself between $3 billion and $6.5 billion. Mobile payment is seen as a fertile ground for investment, especially in an era where consumers are increasingly demanding secure, rapid and convenient modes of payments. Visa and PayPal have extended their digital and mobile payment collaboration to Canada.
It is not the first time that the two behemoths in the payment industry are collaborating; they have already proven their solid partnership in the U.S., Asia and Europe. In Canada, they are targeting around 6.5 million clients by offering them a wider array of options in how and where they pay. A report published by Statista also revealed that 48% of responding Canadians said they were very interested in mobile payment.
A partnership to offer a smooth payment experience to clients
The main goal of this partnership is to appeal to a maximum of clients by offering a seamless and smooth experience when they pay with their Visa card at locations that accept PayPal. This collaboration allows customers to add Visa cards to their PayPal wallets and to transfer funds from their PayPal account to eligible Visa debit cards in real time through the Visa Direct money transfer system. For Visa Canada, this partnership will allow them to propose more innovative products and improve payment experiences online, in-app and in-store for all joint customers.
Moreover, Visa and PayPal have planned to expand participation in the Visa Digital Enablement Program (VDEP). This token technology program, launched in 2015, takes the existing 16 digit number on credit or debit cards and replaces it with a digital token used in contactless payments. Through this program, Visa’s partners are given access to tokenization technology, which enables straightforward and secure payment on mobile phones or any connected device. PayPal’s participation in this program means that the use of PayPal will be expanded to those businesses that accept Visa in physical locations.
China’s Alipay is also investing in the Canadian market
China’s Alipay has not delayed in infiltrating the Canadian market, basing itself on the massive number of Chinese tourists visiting North America. In 2017, 682,000 Chinese tourists visited Canada, reflecting a growth of 12% compared to 2016.
Launched in Canada in 2017, Alipay Canada has around 5,000 active merchants in the country and about 600 million users in China. The mobile payment platform is seen as a boon for various businesses who can propose familiar and user-friendly mobile payment option to demanding Chinese tourists, students and other visitors; studies have demonstrated that the latter are keener to make purchases abroad through familiar mobile payment apps such as Alipay instead of having to pay in cash or in another currency.
Merchants can also offer coupons and deals through the platform. For instance, a user in China buying a flight to Canada can be notified of local deals upon landing and receive follow-up messaging after return. Alipay Canada sees this service as a payment-plus-marketing service rather than a simple payment option.
Businesses are forced to innovate to offer large payment options
Mobile-oriented payment options such as Google Pay, PayPal, Square, Stripe, and, potentially soon, Bitcoin and other cryptocurrencies are proliferating in Canada. Businesses are, hence, systematically impacted by the payment options that they propose to consumers. Resource-strapped companies can find themselves trapped in a complicated web, having to decide which options to propose. While many merchants are already overwhelmed when it comes to dealing with existing payment methods, they are also not well-prepared to incorporate newer ones, especially emerging options that are not yet well-established.
At the same time, many of the payment options services are incessantly adding features, security updates and other changes, entailing additional headaches for business owners. However, the solutions are numerous as well. Experts recommend opting for an aggregator, that is, a centralized service that has the ability to vet and implement various payment methods on the behalf of a business. Some good examples are Shopify Inc. and Moneris. Shopify, for instance, can accommodate the large majority of the most popular mobile payment options such as Apple Pay, Google Pay, PayPal, Alipay, Paysafe, Bambora and Giropay. Choosing an aggregator can allow businesses to continue focusing on sales rather than worrying about payment methods.
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