With a highly banked population and a reputation around the world for being fiscally responsible, a new survey reveals that many Canadian consumers face challenges with the current ways they manage their finances, budget and pay for goods. As a result, Canadians from coast to coast are considering new financial tools to help them solve these problems and take control of their financial lives.
Entitled “How Canadians Pay Today,” the survey of 1,003 Canadian consumers was conducted by Leger and commissioned by the Canadian Prepaid Providers Organization (CPPO), the voice of the rapidly growing open loop prepaid payments industry in Canada. The cards look and function like traditional credit and debit cards and can be used anywhere the card network (American Express, MasterCard and Visa) is accepted, including online and around the world. However, they do have a significant difference to credit and debit cards: they access a set amount of funds that have been pre-loaded for a consumer by a consumer, business or government. According to MasterCard Canada the industry is expected to reach CDN$ 4.9 billion in merchant spend in Canada in 2015.
“While Canada has one of the most progressive populations with respect to adoption of financial services, this study shows that there are still concerns with payment security, budgeting and managing finances, and open loop prepaid cards can help alleviate those problems,” said David Eason, CPPO co-founder and Chairman of the CPPO and Berkeley Payment Solutions. “Open loop prepaid products are the fastest growing form of electronic payment in the U.S., with USD$200B in merchant spend in 2014. Canada’s market is expected to follow this growth trend as many Canadians look for secure and convenient ways to manage their finances, budget and reduce debt.”
Other results from the How Canadians Pay Today survey include:
Three quarters of Canadians prefer not to carry a lot of cash; current financial products aren’t fully meeting their needs
Three quarters (74 per cent) of Canadians prefer not to carry a lot of cash and 78 per cent use less cash than they used to. Despite this fact, 65 per cent are concerned about using their debit and credit cards at online retailers and 45 per cent are worried about security of their cards.
Vast majority of Canadians (82 per cent) want payment cards that avoid overdraft or interest charges
Open loop prepaid cards access a set amount of funds, so Canadians can avoid overdraft fees, NSF fees and interest charges. The majority (82 per cent) of Canadians want a payment card where they would not be charged those fees.
Less than one-third of Canadians set a budget, stick to a budget and have difficulty tracking their spending
Fifteen per cent of Canadians rarely or never stick to a budget and 12 per cent never even set budgets. Almost one-third (30 per cent) cited difficulty in tracking spending. And 40 per cent of Canadians would welcome a payment card with a set spending limit, such as an open-loop prepaid card, so they can stick to a budget.
Canadians starting to look for new ways to manage finances; one-fifth use gift cards to set spending limits; one-in-four want a payment card with a spending limit; more than half would consider using open loop prepaid cards
Some Canadians are starting to use and seek out tools that help them set spending limits and budget. One-fifth (21 per cent) of Canadians are using gift cards to help them set personal spending limits when they shop, 40 per cent want a payment card with a set spending limit, and over half (60 per cent) want online services or apps to help them budget.
One solution Canadians are considering is open loop prepaid cards as they offer consumers a set spending limit, so they can stick to a budget as well as access online tracking tools and text alerts to help them monitor spending. After learning about the benefits of open loop prepaid cards, over half (55 per cent) would consider using one.
More Canadians than Americans satisfied with prepaid cards; Canadian awareness levels and adoption growing
Six in 10 Canadians are aware of reloadable open loop prepaid cards but only 29 per cent have used one (compared to 60 per cent in the U.S.). A higher level of Canadians (73 per cent) have expressed satisfaction with reloadable open loop prepaid cards than Americans, where there is a 70 per cent satisfaction rate with open loop prepaid cards.
“The survey findings reinforce what we know: Canadians are looking for more payment options that meet their needs. Open loop prepaid cards provide the safety and convenience Canadians are looking for and we have joined the CPPO to help further educate consumers and businesses about the benefits,” said Tom McTague, VP, Prepaid, MasterCard.
Because of the growing popularity of open loop prepaid in Canada, and on a global scale, the not-for-profit CPPO has launched with the support of major financial institutions, card networks and other industry players.
“Canada’s leading payment players have created an Association that will be the educational resource for open loop prepaid card information, so that consumers and businesses can have the best experience with the products,” said Jennifer Tramontana, CPPO co-founder and executive director. “This industry is expanding by leaps and bounds and the time was right to give it a voice.”
About Open Loop Prepaid Cards
Open loop prepaid cards are a cost-effective, flexible and easy-to-use payment tool. The cards can be used anywhere the card network (American Express, MasterCard and Visa) is accepted, including online and around the world. They are rapidly replacing cheques as a less expensive and more secure option for issuing payments. Open loop prepaid cards look and function like traditional credit and debit cards at the point-of-sale and offer the same fraud and loss protections offered by the card network with a significant difference” they access a set amount of funds that have been pre-loaded by a consumer, by a government or by a business.
About The Canadian Prepaid Providers Organization (CPPO)
The CPPO is a not-for-profit organization and the collective voice of the open loop prepaid payments industry in Canada. It is the only Association solely focused on this growing industry and is supported by major financial institutions, card networks and other industry players. The CPPO is focused on awareness and education so that consumers and businesses can have the best experience with these popular products. Members of this not-for-profit organization include major financial institutions, payment card networks, program managers and key vendors that support the growth of this industry. Founding members include: American Express (Amex Bank of Canada), Bank of Montreal, Berkeley Payment Solutions, Home Trust Company, Incomm Canada, MasterCard Canada, Peoples Trust Company, RBC, Scotiabank and The Fletcher Group LLC. Supporters include Cassels Brock & Blackwell LLP and Blake, Cassels & Graydon LLP. For further information, visit www.cppo.ca. Connect with CPPO on Twitter and LinkedIn.