By Anurag Kar
So much of our daily lives is online, digital and on-the-go, whether it’s how we communicate with each other, how we learn about current events or consume entertainment and increasingly how we conduct business and make purchases.
Naturally enough, businesses from large retailers to financial services providers and even sole proprietors in the gig economy will rely more and more on digital payments to transact with their customers and suppliers.
What does this mean for businesses that want to grow?
The speed and effectiveness of how businesses adopt digital payments solutions will play an increasingly larger role in how they connect with customers, disburse payments, manage cashflow and grow revenue.
As Canada’s leading payment and digital information network, Interac has unique insights into how consumers and businesses alike are embracing digital payments: and how both consumers and businesses are using Interac e-Transfer at record levels for a wide variety of payments.
A surge in digital payments
2018 was a banner year for digital payments in Canada. At Interac, we saw an unprecedented surge in the use of Interac e-Transfer both by consumers and businesses. There were 371.5 million Interac e-Transfer transactions: which represents a 54 per cent year-over-year growth in transaction volumes. That’s the highest level of growth since 2005. More specifically, Interac e-Transfer was used by Canadians more than one million times per day.
To put this in dollar terms, the total value of Interac e-Transfer transactions in 2018 was $132 billion, a growth of 45 per cent from 2017.
While we’ve seen year-over-year growth with our Interac e-Transfer platform, we’ve simultaneously seen growth in the service’s mobile adoption, with more than 76 per cent of all transactions being deposited on mobile devices. This data point shows that users are not just embracing the ease and convenience of digital payments, but they are taking to mobile payments as well.
In helping to understand the surge in the use of digital payments, one particular statistic stands out as encouraging—both for the continued growth of the service—and for businesses that want to better understand the changing payments landscape. In 2018, the average transaction value of an Interac e-Transfer was $357. Comparing that to six years ago, that number has come down from $465.
Pairing this measure with 2018’s surge in frequency is a clear indication that customers and businesses are making digital payments a regular part of their daily lives, in how they transact and how they do business. The feeling among Canadians that digital payments are becoming more normalized and more integrated into their routines will only continue to drive usage growth.
Opportunities for consumers, businesses
The unprecedented surge in digital payments provides a wide range of opportunities. At the consumer level we’ve seen an embrace of digital payments for transactions that range from making group purchases—for example, sharing the cost of a meal of a trip to the movies—to paying a babysitter or dogwalker.
Our numbers demonstrate that Interac e-Transfer has become a trustworthy payment solution known for its speed, security and convenience. The latest additions to the platform are now making it that much easier for everyday use.
One of the newest options for users the ability to Request Money, a feature that makes it easier for individual consumers to make group purchases. But there are significant opportunities for businesses as well. Coupling this feature with Autodeposit—which has four million registered users—provides businesses with the opportunity to streamline their invoicing and payments to create seamless real-time payment (RTP) processes.
Moving to RTP
For many years, the majority of businesses have relied on cheques and electronic funds transfers (EFTs) for their payments. But these options can still be subject to clearing delays and liquidity issues.
This is payments the old-fashioned way. It’s not real-time and it imposes burdens on companies and their back offices.
In contrast, RTP offer speed, efficiency, convenience, transparency and security. RTP solutions like Interac e-Transfer are the future of digital payments for businesses of all sizes. Smart businesses can capitalize on this surge in consumer adoption of this payment platform. This presents businesses with opportunities to improve their cash flow through quicker payments and potential revenue growth by providing a smooth payment experience for their customers.
For sole proprietors, features like Autodeposit and Request Money offer a solution that eases administrative burden and increases convenience. With Interac e-Transfer Business Payment Services, business owners can use one platform to receive customer payments, pay rent, manage supplier and vendor invoices and streamline payrolls.
For businesses, RTP offer a solution for both high-volume commercial transactions as well as lower-volume transactions. In fact, in 2018 alone, businesses sent $465 million through Interac’s e-Transfer Bulk Disbursement feature.
And for large commercial businesses, the growing ubiquity of RTP technology offers significant opportunities for back-office efficiencies in their business-to-business (B2B) transactions and in their transactions with individuals. When combined with enhanced, automated data analytics they give businesses more time to focus on revenue growth and customer service.
Taken together, the growing adoption of digital payments by both consumers and businesses—alongside the further integration of these technologies into our daily purchasing, spending and business routines—is a trend that will only become more ubiquitous as technology improves. Businesses of all sizes should take advantage of these opportunities to maximize their connection with customers, the efficiency of their payments processes, and the ease and speed of real-time payments.
Anurag Kar is Interac’s director of digital push payments.
Central 1 blends invoicing, payments with Request Money
Central 1 has integrated the Interac e-Transfer® Request Money feature into its small business online invoicing and payments product. This single digital platform means fewer fees for small business users than with traditional online payment solutions by enabling them to access funds directly from bank accounts and avoiding costly credit card fees.
“For small businesses in particular, the timely collection of outstanding payments is crucial to their success,” said Central 1 senior product manager Randy Johal. “This integrated invoicing and payments solution leverages Interac e-Transfer Request Money, an enhanced user feature, combining two steps into one and, in turn, more quickly putting the hard-earned money back into the pockets of small business owners.”
Saskatchewan-based Synergy Credit Union is the first credit union to offer the service to small business members.
“We’re always looking for ways to serve the growing small business community in the areas we serve,” said Trevor Beaton, Synergy chief innovation and people officer. “Through this exciting partnership with Central 1, we’re able to leverage innovative technology to provide our members with a more simple, streamlined and faster invoicing and payments experience. Credit unions are already the financial institution of choice for small business owners, and Request Money integration with online invoicing stands to bring the community a tremendous amount of added value and efficiency.”