Accelerating eCommerce Adoption in Canada

Despite the highest internet penetration in the world (93% of Canadians have access to the internet), eCommerce adoption has lagged in Canada. According to a recent survey by CIGI Ipsos, 22% of Canadians never shop online and only 23% shop online more than once per month. In other words, somewhere between 6-12 Million Canadians either don’t or are reluctant to shop online.

Identifying the Barriers

So what keeps us from purchasing more online? I believe there are a few statistics that shows the hurdles that need to be jumped, and some are easier to address than others:

1. Shipping Costs. According to a survey by Smart Insights, 44% of consumers have abandoned carts due to high shipping costs.
2. Security concerns. 66% are cautious about sharing credit card information online and 20% of Canadians are strongly concerned (see source).
3. Payment method. eCommerce is highly skewed to credit card as the primary payment method. Despite the availability of PayPal and debit solutions, many retailers only offer credit card payment as an option. This is unfortunate as 40% of consumers (see source) would have more confidence in a shop that had more than one payment method and 59% will abandon a cart if their preferred payment method is not in place.
4. Underbanked. 6% of Canadians have no bank account and 28% are underbanked. With the focus on credit card as the primary payment method, a good portion of Canadians don’t have access to make a purchase online.

In short, it comes down to three themes: The cost of doing a transaction online; Trust with the merchant and the medium (the internet); and the capability of the consumer to make the purchase based on access and preference for specific financial products.

Prepaid Cards support eCommerce

At Payment Source, some of the most successful products we’ve introduced are financial products including the Canada Post reloadable Visa card and the Cash Passport. When we look closer at how these solutions are being used, it reveals much about how Canadians are solving the barriers related to security and capability. Specifically:

• 95% of reloads are done in person at Canada Post using either cash or debit
• 60% of the spend on those cards is used for eCommerce purchases

The implication of this behaviour is that consumers are adding their funds to these products in person so that they don’t need to reveal credit card information online (who we call the ‘digitally nervous’) and as a means of converting (digitizing) cash or their debit funds into a widely accepted online payment method.

This behaviour is also replicated in the gift card world, and the introduction of Amazon Cash is a validation that many of the consumers purchasing gift cards are doing so for their own personal use.

Improving the consumer experience

The solution of a gift or reloadable card, however is still a bit clunky and puts burden on the consumer to solve the problem. This is why we developed Loadhub, which can directly connect a digital retailer to other comfortable and well established payment methods such as cash or debit, and by doing so provide them with access to the digitally nervous or underbanked consumer that wouldn’t normally transact with them.