By: Bhavna Kaushal, VP Partnerships & Payments Strategy

It is well known that we are going through a period of transformational change in Payments. Three key topics that will impact the sector over the long term are trending at events and conferences this year: Digitization, Loyalty and Payments Modernization. Whether you are an established incumbent or a Fintech partnering with global players in the payments ecosystem, these trends will impact our business for years to come.


While cash is taking up a diminishing share of overall consumer and business spend, opportunities for digital payments go far beyond just cash itself.

Today, each person has both a physical and digital journey during their day. Many people start on a social app or email; pre-order coffee using a mobile app on their way to work; set a meeting destination on their GPS; and review the day's agenda on a shared calendar - often before they step into the office. And more and more people are asking for Payments to be a seamless part of that digital journey.

On the merchant side, omnichannel is important to retailers, so it needs to be important to payment providers. While wallets address some aspects of this, they are not the ubiquitous solution. Paying securely anytime from any device or form factor is critical.

There are also large sectors of the consumer spend that have not been included and these have high potential for digitization. Taxes, rent, healthcare, and unattended spaces are all opportunities for digital payments.

Key considerations when developing digital payment programs include:

  • The fact that the innovation formula is not based on where technology is going but where the ecosystem is going. Focus on meeting market and consumer needs, not just on the technical advances. For example, Biometrics are now part of everyday life and conversational commerce is on its way to becoming so. Both make the consumer experience easier and more secure.
  • Have a plan for tokenization - cards are part of apps now. A token lives on even after the physical card is spent. Tokens allow consumers to make secure payments in any environment. As such, tokens help with life cycle management and increasing trust with consumers.
  • Open standards that promote digital interoperability in the mobile space go a long way toward scaling digital commerce globally. For the card networks, this includes EMVCo's secure, mobile commerce standard. Similarly, local partnerships can be strategically important in certain markets that have large adoption rates and scale. In the mobile and digital commerce space, examples include Alipay and WeChat Pay for China or PayTM for India.
  • Look for partnerships in IoT. Gaming, rewards, etc., can use prepaid and similar payment forms for rewards.
  • Build positive feedback loops - even something as simple as a notification of transaction creates a positive brand touchpoint. Cards are otherwise disappearing in the seamless payments environment.

In the end, the goal is to empower consumers, create a lasting relationship, and protect digital identity.


Loyalty programs run deep in the Canadian Payments landscape with a myriad of options including proprietary and coalition programs. While we are starting to see headlines in the U.S. proclaiming "the end of the era of big rewards programs" that cite the high cost of loyalty program rewards as unsustainable, rewards still have a significant influence in spending decisions for many Canadian consumers.

It is also an interesting time to be in the loyalty and rewards space in Canada because the loyalty landscape is undergoing major changes. One of the big ones is the upcoming split of the Aeroplan program from Air Canada in 2020. This will bring opportunities for everyone in the loyalty space. In the meantime, many banks are revamping their own proprietary programs to attract a greater share of consumers.

Key trends in Loyalty include:

  • Focus on digital and mobile - your platform (or provider) should be focussed on real-time, seamless customer insights and experiences;
  • For co-brand programs - a full suite of redemption options is key - aspirational rewards and practical everyday redemptions;
  • For proprietary programs - a focus on customization through behavioural data from distribution channels and retail locations is important. Leveraging proprietary assets as part of the rewards program also helps program economics by reducing redemption costs and bringing in increased revenue from redemption of proprietary assets. Canadian Tire's new Triangle program uses this approach. Many of the Big 5 banks have also incorporated proprietary assets as part of their rewards programs - CIBC Aventura Rewards, RBC Rewards and Scotiabank Rewards all include bank issued Visa prepaid cards among their redemption options;
  • Customer data security and privacy have become increasingly important considerations; and
  • Experiences will play a higher role in differentiation. Experience is becoming a differential asset. The prize is engagement with the customer.


Canada is going through a major change with the Payments Canada Modernization initiative. In addition to modernizing existing payment and settlement rails, they are building a new real-time rail for settlement in near real time.

Canada is following many other countries that have undertaken or are in the process of modernizing their payments systems for faster, more secure payments. This is an open and inclusive effort that will impact payments infrastructure, related policy and regulations.

There is participation from all levels of the government and related regulatory and operational bodies including the Department of Finance and Bank of Canada. The exciting part is how Payments modernization opens up participation in the core Payments and Settlement systems to non-traditional payment services providers for the first time.

The Department of Finance is currently reviewing changes to the Canadian Payments Act to open up associate membership in Payments Canada to non-traditional players. This is especially relevant now with the increase in Fintechs offering new modernized payment options to consumers and businesses. The proposed policy changes can be found in this recent circular: Consultation on the Review of the Canadian Payments Act.

The Department of Finance explains their rationale for these changes stating:

"Payment systems are integral to support economic activity in Canada. Ensuring that these systems are fast, secure, reliable, and flexible allows consumers and businesses to transfer value safely and efficiently. The payments ecosystem is an area of rapid evolution and innovation - mobile platforms, e-commerce, and new players are changing the way Canadians want to pay, and Canada's core payments systems must change to meet this demand."

There are some very exciting changes happening in the Payments and Fintech space these days. Stay tuned for more.

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