The future of money in Canada is digital

Technology-loving Canadians are paving the way for a brave new shopping environment that may soon see us using watches, eyeglasses and even kitchen appliances to make purchases more often than cold, hard cash, according to a new PayPal Canada survey examining our changing retail habits.

Indeed, so enamoured are we already with convenience, experts predict the future of money will eventually become digital and mobile.

“We are on an exponential technology curve where one year to the next massive transformations are taking place,” says Doug Stephens, a Toronto-based retail industry futurist.

That means retailers who don’t have a firmly-built mobile strategy in place over the next five years will find themselves in serious trouble.

“You are going to be playing an enormous amount of catch up,” Stephens says.

Here’s what the future could look like, according to survey results:

• More than a third (35 per cent) of Canadians said they would be likely to use an Internet-enabled car to pay for gas at the pump;

• About 22 per cent indicated they would use an Internet-enabled fridge to shop and pay for food from an online grocery store;

• Using a watch or bracelet that the wearer pays for in-store purchases was popular with 23 per cent of Canadians. Internet-enabled glasses won interest from only 12 per cent.

• The same number (22 per cent) said they would be comfortable using facial recognition technology or a retinal scanner to pay for items in a store; while

• One in about five Canadians (18 per cent) is willing to use a chip implanted in a finger to tap in order to complete an in-store payment.

Clearly, we’re not quite ready to be the Jetson family yet. But, at the current rate of technology and e-commerce adoption in Canada, it may not take as long as we think to get there.

Canadians are among the heaviest Internet users in the world, and most of us (88 per cent) have made an online purchase from our computer or tablet.

A report by the Canadian Internet Registration Authority found that Canadian spending online is on a steady, and steep, incline. Online spending reached $22.3 billion in 2011 (the most recent data published), compared to $20.3 billion one year earlier.

The CIRA report predicts e-commerce will account for 5.3 per cent of Canada’s total spending by 2016 – up from 3.4 per cent of the nation’s total spending in 2012.

Our increasing comfort with mobile and digital devices is driving the change. The PayPal survey found 61 per cent of Canadians already use a form of “digital wallet” to pay for items such as coffee, music and movie tickets. Almost a quarter (23%) use mobile phones to make in-store purchases.

Pressure mounting for retailers

Stephens said retailers in Canada have not felt pressured up until now to keep up with evolving purchasing habits. With so much of the country’s population residing within two hours of a U.S. border, retailers have viewed Canada as an easy market to serve from a bricks-and-mortar perspective.

“All you need to do is follow the 401 from coast to coast and dot the landscape with your stores and you can be relatively assured of business,” he says.

But retailers such as Starbucks that have kept ahead of the technology curve are reinforcing customers’ taste for change. Over the next decade, the pace of innovation is only expected to accelerate, particularly as payment companies get better at addressing user security concerns.

Stephens said retailers must take the opportunity now to create a new kind of shopping experience that goes beyond in-store and online, and come up with a strategy that fits with consumers who want to shop across all their devices.

Those who successfully make the change stand to earn longevity, but, he says, “a lot of retailers won’t make that transition.”