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Member Profile: Payment Source featuring CEO Rob Hyde

What is Payment Source?

Recognized as one of Canada’s Best Managed Companies for five years in a row, Payment Source empowers inclusion by providing alternative payment solutions that enable more equal opportunity for Canadians to engage in the economy to meet their daily needs. Payment Source provides prepaid mobile top-ups, gift cards, and financial products and services via more than 15,000 retailers across Canada. To do so, Payment Source works with the largest and most innovative companies in the industry including Amazon, PayPal, Paytm, Canada Revenue Agency, Canada Post, Intuit, Mastercard, VISA and paysafecard to bring the best possible product mix to bridge the online and bricks-and-mortar retail environment.

Some of our brands include Now Prepay, the largest retail distribution network in Canada for prepaid products, PaySimply, which lets Canadians pay taxes and bills conveniently online in the way they want to pay, and DirectPay, a Pay by Bank option for e-commerce transactions.

How are fintechs addressing financial inclusion needs in Canada?

With the accelerated shift to digital and contactless payments, Canadians continue to seek more choice and flexibility in how they make payments without sacrificing security and convenience. The pandemic has further underscored the need for alternative payment options to help achieve financial inclusion. Technology and the rise of fintechs like Payment Source continue to drive this financial sector forward around the globe. 

Fintechs enable merchants to access more useful, affordable and convenient financial products and services. Business leaders should monitor the current payments landscape and find ways to partner with fintechs to close these gaps that align with their consumer preferences. For example, Interac e-Transfer continues to experience explosive growth in a business setting with a 43% increase in first-time usage last year, and it’s easy to see why: Not all debit cards are able to transact online, there are no balances to manage like with reloadable cards and no accounts to setup and manage like with digital wallets. Offering new digital payments options to supplement card solutions is the next frontier in payments. 

As another example, if a Pay by Bank solution were a payment option at checkout, Payment Source research uncovered that 46% of Canadians would choose to pay this way to help them: avoid credit card debt (39%), manage their finances (32%) and feel more secure about e-commerce (24%). An alternative payments solution like DirectPay makes this possible to help consumers pay online safely and conveniently – and to help narrow the financial inclusion gap. 

As Canadians are shopping more online, how can retailers address consumer preferences for simplicity and convenience in payments?

As consumers continue their digital transformation, Canadians are making more retail purchases online – a number that’s growing according to Payments Canada. E-commerce as a sales channel is no longer a nice-to-have, but a necessary retail option to reach customers where and when they want to buy. Unfortunately for Canadians, one of the more common reasons for not completing a checkout is lack of available preferred payment methods.

While e-commerce merchants are accepting more digital and contactless payments around the globe, offering payment choice is the key to meeting today’s customer preferences and increasing customer lifetime value (CLV). If a consumer’s preferred method of payment is not available, they probably won’t complete the purchase. By offering more payment options such as Buy-now-pay-later (BNPL), mobile wallets, and e-transfers (Pay by Bank) – retailers can enable different types of shoppers to buy from them and grow their business. 

For example, bank payments are globally popular. With DirectPay, merchants can attract new e-commerce customers who prefer to pay directly from their bank account. This lowers cart abandonment, with a seamless shopper experience that has no apps to install or accounts to set up and increases brand goodwill by supporting Canadians with homegrown financial inclusion and fiscal responsibility.

Do Canada’s shopper demographics transact differently online? Can you provide some examples?

Different shopper cohorts prefer different payment methods, and merchants should understand the demographics of their customers when considering the methods they choose to offer. This ensures they maximize conversion. While credit cards continue to be the most-used payment method, usage has declined 11% in volume and 8% in value in Q1 2022. Additionally, despite strong  interest in earning consumer rewards, many credit card users are wary of taking on more debt. Merchants are also facing rising fees, making it more desirable to shift shoppers to lower-cost payment methods whenever possible. 

Digital wallets, such as Apple Pay, are currently the second most-used payment method. They account for 29% of purchases, with adoption rates steadily climbing. Younger generations are the primary users of digital wallets which can also be connected to accessories such as smartwatches. BNPL or installment plans have also gained popularity – most notably for Millennials and Gen Z – making it a smart move to add this payment option at checkout. 

E-transfers, which are poised to meet and exceed debit values in the next few years, are a great case study to showcase the added value of offering Canada’s favourite payment method at e-checkout. Smart payments options such as DirectPay provide payment accessibility, security, and control, while also helping to enable similar payment seamlessness between in-store and online purchases. Customers who feel in control are more likely to enjoy the experience and come back.

What payment trends can online retailers expect to see more of in the coming months?

With growing reliance on digital connectivity, concerns of fraud and cybercrime are largely prevalent and can negatively impact consumer payment preferences and behaviour. Online retailers are increasingly common targets for cybersecurity breaches, including identity theft and billing fraud. Not only is lost revenue a serious consequence, but customer experience is also negatively impacted. So much so that 65% of consumers would abandon a merchant after having a single data breach. Within a company, employee awareness and education must be prioritized to combat fraud and protect an e-commerce store. Technology enhancements, such as adding multi factor authentication (MFA), setting product volume limits, and requiring card verification value (CVV) numbers, are all ways to help protect against digital identity theft. 

E-commerce retailers also have a unique opportunity to support Canadians’ financial health through the payment options being offered. As previously noted, Canadians continue to expect more options and flexibility in how they make payments without sacrificing security and convenience. The gaps in the Canadian market for supporting financial inclusion can be reduced by expanding payment options beyond credit cards.

Where can our readers learn more?To learn more about alternative payment options offered by Payment Source, visit www.paymentsource.ca. Our DirectPay website also includes great resources for online retailers to learn how to decrease cart abandonment and increase repeat purchases.

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