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The Top Payment Trends to Look Out for in 2021

Drawing of all the different ways you can pay digitally
Drawing of all the different ways you can pay digitally

2020 has seen a massive shift in the Canadian financial ecosystem towards digitization. Financial Institutions (FIs) and financial services incumbents are competing on a radically different playing field, up against an increased number of players within the Canadian FinTech ecosystem. Surinderjit Bhatti from the FinTech Growth Syndicate (FGS) highlights the key trends that incumbents need to keep their eyes on.


PayTechs

The PayTech sector was constantly shifting during 2020, with Buy Now Pay Later (BNPL) becoming the most dominant PayTech trend. This technology was accelerated by the pandemic and its resulting economic fallout as people looked for new ways to make purchases. PayBright emerged as a major Canadian player in this space following its acquisition by Affirm. Simultaneously, Tech Giants like PayPal, Shopify, and Square and global players like Sezzle, Afterpay, and Klarna entered the Canadian BNPL space. Prepaid is also enabling innovative use-cases in the market like early payroll access.

Challenger Banks

Incumbents need to keep a close eye on the Challenger Banking space. As of December 2020, there are 30 Challenger Banks in Canada as they continue to make waves nation-wide. Two such Challenger Banks are STACK, which was acquired by Credit Sesame, and Neo Financial, which launched from Calgary. Currently, there’s a huge white space for small- and medium-sized business Challenger Banks in Canada, so they continue to expand their offerings by targeting this segment. Shopify Balance and QuickBooks Cash have both launched in the U.S., and NorthOne and Relay Financial are Canadian-based companies currently operating in the U.S. Incumbents need to watch out for Challenger Banking solutions, especially if Tech Giants start to enter Canada with similar digital banking offerings.

Tech Giants

Tech Giants like Google, Amazon, Google, and Apple are methodically launching their payments offerings in Canada and will substantially increase the competition in the industry. Tech Giants are also partnering with FIs, as seen in Google’s partnership with BMO and Shopify’s partnership with both Stripe and Evolve Bancorp. This shows some FIs are taking a partnership route to innovation.

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