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Digital wallets are proving popular in Canada, despite data privacy concerns

Published on 2023-07-20 by Tessa Anaya

We asked just over 1,000 smartphone users in Canada what they think of digital wallets and how they use them. The results tell us a lot about the future of tech, commerce, and finance.

usage of digital wallets in Canada

Digital wallets have become popular because of their convenience. These apps allow shoppers to make payments for goods and services in physical stores just by tapping their phone (or smartwatch) on a card reader. And like regular wallets, they can also be used to store tickets, coupons, gift cards, loyalty cards and ID —some can even hold car keys.

Although the digital wallet apps are provided by large technology and finance companies —and run on devices made by similarly large enterprises— their rise is of particular interest to small to midsize enterprises (SMEs).

That’s because the growth in digital wallets reflects changes in three fast-moving areas: technology, finance, and retail. Consumer sentiment about digital wallets gives SMEs clues about topics like payments, security, privacy, and digital experiences.

We surveyed more than 1,000 smartphone users in Canada to find out more. This article represents part one of our findings and provides a general overview of the topic. Part 2 will dig deeper into issues around payments, privacy, and policy. You can scroll down to the bottom of this article for a full methodology.

What are digital wallets?

Because there are many technologies that enable consumers to make payments, the term ‘digital wallet’ may be easy to misinterpret. For the purposes of this survey, we used the following definition:

Digital wallets are smartphone/smartwatch apps that can store payment details and different types of ID/credentials (credit card details, gift cards, tickets, driver's license, etc.) and allow users to pay without using a physical credit/debit card or to identify themselves and/or enter a place without a physical ID, credential or ticket.

Overall, familiarity with these apps is high among people in Canada. 71% already knew that the above definition related to digital wallets before being told, while another 19% said they were familiar with the concept but didn’t know the name.

Adoption is also widespread. Nearly half (47%) of those surveyed in Canada are currently using a digital wallet, and another 11% have used them in the past but don’t any more. Usage looks set to increase further: one quarter (25%) said that while they hadn’t used a digital wallet yet, they would be interested in doing so.

consumer use of digital wallets in canada

Digital wallets have been around since at least 2011 (which was when Google launched Google Pay, one of the first mainstream tap-to-pay apps) but usage appears to have taken off since 2020. 81% of digital wallet users in our survey said they began using theirs in the past three years. We also asked those who use their digital wallets as a way of paying via a credit or debit card whether the COVID-19 pandemic pushed them towards more digital methods of payment and away from cash. Two thirds (66%) agreed that it did.

Key takeaway: Digital wallets are getting more popular all the time. If your SME doesn’t yet support payment via digital wallet, you should consider what infrastructure you might need. This could include payment processing and point of sale software. There are also vendors who supply tap-to-pay devices that work with existing point-of-sale systems or your tablet or mobile, so you can take payments anywhere with a mobile signal.

Why are people interested in digital wallets?

Digital wallets offer several advantages to consumers. Understanding why they use them also offers SMEs insight into their general preferences when shopping and paying.

The primary attraction of digital wallets, according to people who have not yet used them, is as a way to pay using their credit or debit card. 82% said they would be interested in this, but there were many other functionalities that people saw as secondary benefits. Large minorities were also interested in:

  • Loyalty cards (42%)
  • Identification cards (driver's license, etc.) (35%)
  • Storing event tickets (34%)
  • Gift cards (33%)
  • Storing plane/train/bus tickets (32%)
use of digital wallets by current users and interested parties

This closely reflects the actual use cases reported by those who have digital wallets. Again, payment using credit or debit card is the most popular, while a majority also use it to store their loyalty card, and 46% store event tickets. Perhaps one notable difference is the lower proportion that use their digital wallet as a means of ID compared to the non-users who would be interested in doing so. This may be because not all apps support this functionality, or may not support the specific type of ID that users in Canada want.

Did you know? Consumers and brands can both benefit from customer loyalty programs, where shoppers earn rewards for their purchases. It is possible to run these schemes in different ways, using loyalty software, apps, or cards for customers to store their points and rewards. Digital wallets also provide a convenient digital store for these cards, which could encourage customers to sign up to your program.

Convenience and safety appear to be significant drivers for digital wallet adoption. 82% of those who use them say that convenience is an advantage compared to traditional methods. And 60% identified with the statement ‘I don't have to carry my wallet and therefore risk losing it’. Around one-quarter said they liked how digital wallets can reduce fraud through encryption (24%) and how digital wallet usage can be tracked (23%).

What’s preventing wider adoption of digital wallets?

Although digital wallets are in widespread use, a slight majority of people taking our survey in Canada do not currently use them, and it’s worth examining why. The issues here are illuminating in themselves, but offer a valuable lesson for any SME thinking about digital adoption.

Among those who say they have no interest in digital wallets, data protection is a major concern. 60% of these respondents gave this as a reason behind their reluctance, and 58% said ‘I don't want to store sensitive information on my smartphone, in case it's stolen’. These were also high-ranking concerns for people who have not used digital wallets yet, but are interested. Among this group, 41% are worried about data protection, and 37% don’t want to store data on their smartphone, the second and third biggest factors.

However, the biggest reason for people not yet downloading a digital wallet app (despite being interested) is the fact that they’ve not needed to— yet. 51% agreed with this. Most point-of-sale terminals in retailers that accept digital wallet payments also accept cards. So long as shoppers have their card on them, they can usually make payments with just a tap.

reasons for rate of adoption of digital wallets
Key takeaway: Two findings are buried in the data, but provide a useful reminder to SMEs. The main message is that customers clearly value data protection, and it’s important for SMEs to be able to communicate the security of their processes clearly. However, many of those interested in digital wallets (15%) say they don’t know how to set these apps up. This highlights a clear barrier to entry, at least for some. At the same time, a lack of specific need means that many haven’t got around to using these tools. Brands that want to drive adoption of any digital tool should remember that doing so should be easy and consider how to incentivise customers to make a switch.

What are the downsides of digital wallets?

Digital wallets have been around long enough for users to know what they like and dislike about them. Again, data protection and security came up as significant factors. Among users who have stopped using a digital wallet, 31% did so because they were ‘worried about data protection,’ and 33% didn’t want to store sensitive information to their phone in case it was stolen. The latter was also a concern for current users. 46% of them agreed that ‘If my smartphone is stolen or lost, a lot of sensitive information is compromised.’ This was the most frequently cited disadvantage among this group.

However, we also observed reservations related to overdepenence on smartphones. 40% of current users said this was a disadvantage, and 25% of those who stopped said they didn’t like being so dependent on their phone. This makes sense: if a smartphone runs out of battery, users lose what might be their only means of payment. 44% of current users recognise that scenario as a specific disadvantage. 

Similarly, the biggest reason for no longer using a digital wallet was simply that those people (59%) prefer using traditional cards.

How do digital wallets compare to physical ones?

Although digital payments have become more popular, especially since the start of the pandemic, Canada is not yet a cashless society. Consumers that use digital wallets also use traditional methods of payment, but which method they prefer differs depending on the scenario.

preferences for digital wallets vs. traditional wallets

As well as using digital wallets for payments, users strongly prefer these apps to store tickets— both for events and transport. The same applies for membership cards, loyalty cards, coupons, and even their car keys, although they prefer traditional forms of identification. This point may have to do with lack of support for digital forms of ID in Canada.

Given the above data, it is hardly surprising that digital wallet users are happy with these tools. When asked to rate their level of satisfaction with their experience on a scale of 1 to 10, they gave an average score of 8.3.

Key takeaway: Although digital wallet users recognise the risks of smartphone dependence, they prefer using apps for many aspects of their lives. If SMEs don’t already have a mobile-first strategy, they should be developing one fast. Digital wallets are not just relevant for retailers, either. They are multifunctional tools that are impacting many other sectors.

Digital wallets look here to stay. Are you ready?

Digital wallets have become popular in Canada since the pandemic began. Today, nearly half of smartphone users use one, and another quarter are interested. Those who actually use digital wallets have a strong preference for them over traditional wallets for most use cases and are highly satisfied with them overall.

Because payments are the main driver for adoption, consumer-facing SMEs should ensure that they can accept tap-and-go transactions, if they don’t already. However, they may also want to consider whether their customers could also hold tickets, gift cards, or loyalty card information in their wallets.

Both users and non-users of digital wallets have concerns about data protection. In some cases, these concerns are stopping people from using them altogether. Transparency from brands goes a long way in reassuring shoppers about the safety of transactions, whether that’s online or in-person. SMEs should ensure that their security and privacy policies are up-to-date, compliant, and clearly communicated to customers.

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GetApp’s data for this study was gathered through an online survey conducted in June 2023 in which we surveyed 1016 people residing in Canada from all regions in the country. The sample of participants is representative of the population of Canada regarding aspects of age and gender, and the criteria for selecting participants are as follows:

  • Over 18 years of age
  • Must own a smartphone
  • Must be able to correctly identify the definition of digital wallets after being provided one

This article may refer to products, programs or services that are not available in your country, or that may be restricted under the laws or regulations of your country. We suggest that you consult the software provider directly for information regarding product availability and compliance with local laws.

About the author

Tessa is a Content Analyst for GetApp, delivering software-related insights to local SMEs. She was featured in the Globe and Mail, La Presse, the Financial Post, and Yahoo.

Tessa is a Content Analyst for GetApp, delivering software-related insights to local SMEs. She was featured in the Globe and Mail, La Presse, the Financial Post, and Yahoo.